The SEC's Divisions of Enforcement and Trading and Markets put forth a “Statement on Potentially Unlawful Online Platforms for Trading Digital Assets” regarding the legal ramifications of such platforms operating as “exchanges,” as defined by the federal securities laws. Such a designation requires that the platform must register with the SEC as a national securities exchange or be exempt from registration -- practically meaning registration as an alternative trading system (“ATS”). Each road to registration is fraught with its own pitfalls that need to be carefully examined but for those entities already in operation and potentially within the crosshairs of the SEC, the only viable business option is to try to register as an ATS.
The SEC's Division of Corporation Finance discussed its views on token sales and other blockchain issues.
Paris Hilton, Floyd Mayweather, Jamie Foxx and other celebrities have all recently promoted Initial Coin Offerings (ICOs) to their social media followers. But as celebrity promotion and endorsement of ICOs and other investments gain steam, the Securities and Exchange Commission is reminding them to heed federal securities laws.
Regulators and industry groups continue their efforts to understand blockchain technology and its implications for the securities, futures and related financial sectors. Importantly, regulators and industry groups have not yet advocated for or against any particular type of blockchain technology. Rather, efforts have largely centered on defining what, in the view of those regulators and industry groups, blockchain technology is, how it may be used in the financial services industry, and what the regulatory implications are for its use.
Murphy & McGongile's Matt Comstock authored an article on TheHill.com, "SEC Ramps-Up Blockchain Efforts."
Mr. Comstock is a panelist for Regulatory Compliance Association “SEC Initiates Flash Boy Regulations – A Comprehensive Analysis.”