SEC to Unveil New Guide to Assess Legal Status of Token

The document is not an official guide and, therefore, is not legally binding
04 April 2019   577

The US Securities and Exchange Commission (SEC) has published a new guide for issuers of cryptocurrency tokens, which can be considered unofficial instructions for determining whether issued assets fall into the category of securities. The document has been drafted over the past six months by the agency's Strategic Hub for Innovation and Financial Technology (FinHub).

In particular, the document notes that when assessing the legal status of their financial instrument, tokens issuers are encouraged to pay attention to such factors as income expectations, the presence of centralized structures responsible for performing certain tasks in the network, as well as the ability to create and maintain digital asset markets.

In this context, the SEC refers to the Howie test applied to a wider range of financial instruments. From it, management included such factors as the dependence of the asset price on the actions of the project organizers, reasonable income expectations, probable areas of use, the correlation between the initial selling price of the token and its market rate of the token.

It is curious that in the context of the Howie test only one item “reasonable expectations of income from the actions of third parties” in the document is allocated several pages. As the authors note, it is this aspect that usually represents the greatest problem when analyzing digital assets.

The commission also explains how distributors of tokens, which are already in the hands of investors, should register their campaigns and whether the status of an asset, initially issued as a security, could be revised at a later stage.

Thus, in the process of revising the legal status of a digital token, the SEC applies the following criteria:

  • The distributed registry network and digital asset are developed and functioning, that is, users can immediately use a token to perform a function;
  • The token has a specific scope, not limited to market speculation;
  • The token has limited growth prospects;
  • When used as a currency, the token is able to perform the function of a means of preserving value.

The document is not an official guide and, therefore, is not legally binding. Also, it is unlikely to provide any fundamentally new legal information, only more deeply revealing the previously voiced position of the SEC representatives on this issue.

South Koreans to Invest in Crypto Actively

In addition to the investment amounts, the share of those interested in investing in digital assets also increased
22 April 2019   84

The average amount of investments in cryptocurrency from South Korean invesetprs is $ 6,100, which is 64% more than last year, Cointelegraph reports.

According to a survey conducted by the Korean Fund for the Protection of Portfolio Investors, in addition to the investment amounts, the percentage of those interested in investing in digital assets also increased. Thus, 7.4% of the 2500 respondents have already acquired cryptocurrency (last year there were 6.4% of those). It is noteworthy that this figure has increased, despite several major break-ins of the South Korean crypto exchange, as well as tougher regulation of the industry.

Analysts connect the market with a recent bitcoin price jump and hope for a new bull rally.

Recall recently it became known that 94% of trust capital funds invest in cryptocurrency.