Blockchain Blog

“Framework for ‘Investment Contract’ Analysis of Digital Assets”

In two significant developments for the Digital Assets space, the SEC issued today a No-Action Letter to TurnKey Jets and a “Framework for ‘Investment Contract’ Analysis of Digital Assets.  The SEC’s No-Action Letter, relying on counsel’s opinion that the TurnKey token was not a security and TurnKey’s commitment not to use token-raised funds for platform development, announced that the investigating division would not recommend an enforcement action to the SEC Commissioner.  The underlying assumptions to the SEC’s decision are highly fact-specific but provide helpful guidance for future token offerings. 

 

Importantly, the SEC also announced publication of a framework for “analyzing whether a digital asset is offered and sold as an investment contract, and, therefore, is a security.”  While the Framework does not provide a complete analysis, exhaustive overview of the law, or specifics for any particular company, it does provide much-needed guidance for any company considering a token sale in the United States.  Notably, the Framework walks through a Howey analysis and applies it to the SEC’s current understanding of digital assets.

 

If you are considering participating in any way with a token sale, whether by offering, selling, marketing, buying, holding, or services related to a token sale, this framework is a very important step forward and should be included in your due diligence.  Reach out to CKR if you are considering any type of token offering and we can help you hold a compliant offering.          

 

Click Here to read the full SEC Statement release. 

 

Should you have any questions, feel free to contact one of our Blockchain Technology & Digital Currency Group members. 

Alexandra Levin Kramer akramer@ckrlaw.com

Greg L. Ewing gewing@ckrlaw.com

Barrett S. DiPaolo bdipaolo@ckrlaw.com

Chi-Ru Joucjou@ckrlaw.com