Some blockchain projects, which conducting the ICO will be able to circumvent the registration requirements of the securities due to the "no-action letters" from the Securities and Exchange Commission (SEC).
This was stated by the Chairman of the Commission Valerie A. Szczepanik during his speech at the event Wall Street Blockchain Alliance (WSBA). She also noted that there is nothing unusual, however, such letters will still be quite rare.
Valerie A. Szczepanik, who became a the SEC’s first-ever senior advisor for digital assets and innovation in June this year, said:
"This method will be useful to many people involved in the implementation of their own projects, but compliance with the format of the rules prevents them from doing so".
According to Szczepanik, the issuers of the tokens, there are three options for ICO: they can register as a securities offering, apply for an exemption or “make sure they’re not a security“.
In exceptional cases, the SEC may decide that "the proposal does not meet the legal requirements, but still able to perform tasks for the protection of investors". In such cases, the Commission may issue a "no-action letters", according to which, its employees will not be able to compel the issuers to the observance of the regulations.
"The letters set forth exactly what the person plans to do or the entity plans to do and if it’s something that the SEC feels comfortable with we can release a no-action letter for exemptive relief".It is noteworthy that the letters are not binding. Often, they depend only on individuals or companies producing securities, which strictly observe the conditions set out in the approved proposal. According to Szczepanik, some projects are already connected to this process through the SEC’s FinHub program.
Szczepanik also explained the principle of classification of tokens as securities:
"Any classification based on structure of sales. In some cases, sold the token does not fall into the category of securities. However, investors of such projects will rely on the income that will make a particular token equivalent securities. After project development, the buyers of tokens can use them without the purpose of profit — in this case, the classification of the token may also be altered. If token, who buyers do not expect him to profit, will be issued a full ecosystem, such a concept may have potential."
Szczepanik noted that the majority of ICO, apparently, plans to attract investors from the United States because of the size of the available markets:
"Many creators the blockchain projects offering their own tokens, I want to work in America with local investors. In my opinion, the existence of strong markets will help these entrepreneurs in the long term."