SEC Staff Publish Framework for Determining If Digital Assets Are Investment Contracts

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Staff at the United States Securities and Exchange Commission (SEC) have published a framework to help market participants ascertain whether or not a digital asset is deemed to be an investment contract, and therefore a security. The new “Framework for ‘Investment Contract’ Analysis of Digital Assets” was published on April 3, accompanied by an official statement.Notably, the framework is the work of two SEC Commissioners: Bill Hinman, director of the SEC’s Division of Corporation Finance and Valerie Szczepanik, Senior Advisor for Digital Assets and Innovation — colloquially known as the Commission’s “crypto czar.”The guidance is therefore not a rule, regulation, or statement of the U.S. Commission, which has reportedly neither approved nor disapproved its content.As the authors stress, the framework is not intended to be exhaustive nor to provide formal legal advice, but to serve as an analytical tool that will help operators of initial coin offerings (ICO) and token…

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