The U.S. Securities and Exchange Commission (SEC) Strategic Hub for Innovation and Financial Technology (FinHub) published a framework on April 3, 2019, for analyzing whether a digital asset is offered and sold as a security under the federal securities laws.
The framework includes “common sense guidance” that provides greater detail and clarity regarding the application of the federal securities laws to digital assets and is intended to be “an analytical tool to help market participants assess whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset.”
Concurrent with the announcement of the framework, the SEC’s Division of Corporation Finance issued a no-action letter in connection with TurnKey Jet, Inc.’s proposed offering of a digital asset for use in its air charter business. The no-action letter provides the first illustrative example of how a digital asset can be sold without having to register it as a security.
This client update provides an overview of the framework, the TurnKey no-action letter and key takeaways for market participants and companies innovating in digital asset products and services.