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SEC Rare Official: Allowing ICO to sell tokens under certain conditions

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In the early hours of April 4th, the US Securities and Exchange Commission (SEC) issued a statement on the official website about digital assets as a framework framework for securities, in which the SEC made concerns about the legality of ICO and digital currency securities.


This is the SEC’s relatively rare “voice” on the official website for cryptocurrency regulation.

According to the shared financial reporter, the statement was issued by the US Center for Strategic and Financial Technology Innovation. Among them SEC officials proposed:

Incorporating the purchase and trading of digital assets into the regulation of securities, helping digital currencies determine the legality of their securities and registering with regulatory agencies.

The SEC said, “With the continuous development of financial technology, capital formation methods and market structure, the activities of market participants may belong to our jurisdiction and be registered. Even if registration is not required, activities involving securities digital assets may still be subject to SEC regulation.”

For example, if a company is considering issuing ICO or otherwise participating in the provision, sale, or distribution of digital assets, more specifically, all information in this framework can be applied to entities that:

●provided, sold or distributed;

● marketing or promotion;

● trading;

● Promote communication;

● hold or store;

● Provide financial services such as management or advice;

● Other professional services.

The SEC said:

The framework is not a comprehensive overview of the law, but an analytical tool that helps market participants assess whether federal securities laws apply to the sale, sale, or resale of a particular digital asset.

It is noteworthy that, at about the same time, the SEC issued the first “no action” letter. The letter shows that the US Securities and Exchange Commission has approved the encryption asset company TurnKey Jet to operate the ICO, agreeing that the token is not a security, allowing the ICO to sell tokens in the United States under certain conditions.

For the first “no objection” letter, Joshua Ashley Klayman, a lawyer in the digital currency field, said, “Publishing a letter of no action is a big step forward for the industry. This is what the market needs and has been Looking for a guide.”

Background

■ The US SEC has always believed that blockchain technology can promote a wide range of innovations, and the United States is currently focusing on the development of this technology. The SEC has seen these technologies used to create financial instruments, sometimes in the form of tokens or coins, and can offer more investment opportunities.

■ The US SEC has postponed and rejected applications from several asset management companies Winklevoss, VanEck, SoildX, and Bitwise Bitcoin ETFs since 2018, which has caused dissatisfaction among most investors. Many industry insiders and officials have voiced that the SEC should protect the interests of investors and have no right to limit investors’ choices.

New considerations

In the document, the SEC highlighted the evaluation criteria for encrypted assets.

○ Whether the distributed ledger network and digital assets are fully developed and operated;

○ Whether the holder of the digital currency (tokens) can immediately use it for the intended function on the network;

○ The creation and formation of digital assets is designed and implemented to meet the needs of users, rather than simply for hype or development;

○ The prospect of digital asset appreciation needs to be set to a certain limit;

○ For a certain virtual currency digital asset, it can be used immediately for payment functions in a variety of situations, or as a substitute for real (or legal) currency, and so on.

A series of actions by the US SEC against cryptocurrency

On March 16 this year, Valerie Szczepanik, senior adviser on digital assets at the US Securities and Exchange Commission (SEC), pointed out that under current securities laws, stable currency may encounter problems. She believes that there are three types of stable coins:

One is associated with physical assets such as gold or real estate; the second is the type associated with the legal currency in the reserve; the third is the use of market financial mechanisms to maintain price stability. As time goes by, the last one is likely to enter the scope of securities regulation.

On March 25, according to foreign media reports, the US SEC has confirmed the recruitment of a cryptocurrency lawyer expert for its trading and marketing department (TM). The job list stipulates that if hired, the professional will work with TM staff and other members of the SEC’s various departments to develop a “comprehensive plan to address encryption and digital asset security issues.”

It is understood that the US SEC’s move is to accelerate the approval of the Bitcoin ETF. Just yesterday, the US Congress proposed to introduce two new cryptocurrency bills, intended to promote the approval of the Bitcoin ETF. It happened that shortly after the news broke out, the price of Bitcoin skyrocketed by 20%.

On March 29, the US Congress proposed two new cryptocurrency-related bills designed to address price manipulation issues and enhance US competitive advantage in emerging industries. Given that the primary goal of HR 922 is to identify ways to address such issues, it can facilitate the approval of Bitcoin ETFs.

On April 4th, the US SEC issued a statement on digital assets as a portfolio framework for securities, proposing to include the purchase and trading of digital assets in the regulation of securities, and subsequently help the digital currency to determine the legality of its securities.

To sum up

From the guidance framework and a series of actions issued by the US SEC, it is to promote the development of blockchain and digital currency in the country. Considering the wishes of investors, the SEC temporarily relaxed its regulatory attitude towards ICO.

In addition, the SEC is considering incorporating cryptographic digital assets directly into US securities regulators, with the aim of facilitating subsequent blockchain and cryptocurrency regulations and advancing the approval of Bitcoin ETFs.

In any case, the release of this heavy news has added confidence to the digital currency market that is picking up.

Source: Sharing Finance Milky Editor: Alian

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