Some Flexibility On Token Offerings Might Be On The Horizon
Things are looking brighter for token projects in the US. While earlier they had to stand in the queue to fill out all the documents, now they can obtain so-called no-action letters from the SEC. That further implies that there’s no need to be concerned about getting their application denied, in case they can’t match up with the requirements.
On Thursday, while speaking at an event hosted by the Wall Street Blockchain Alliance (WSBA), Valerie A. Szczepanik made this announcement. She said:
“I think that’s a way forward for a lot of people who want to implement some of these things that may not exactly fit in the format of the rules that we want.”
In those rare cases where the registration is required, a ‘no-action letter' may be issued by the SEC. This essentially means that the staff is not suggesting that the SEC enforce any actions towards the issuer.
Szczepanik further explained:
“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 saying ‘we can recommend no enforcement action.’”
Earlier Jay Clayton had advised that people looking at raising money through tokens should have the basic assumption that it will be classified as securities. Szczepanik elaborated this point further:
“It’s a rare set of circumstances where a token will not be classified as a security during a sale. Generally, investors in a project will be looking for a profit, which is sufficient for the classification. If it’s a fully developed ecosystem or a blockchain and a token will be issued that will be used …. And that’s what people buy it for, there’s no promise of profit, I think that’s potential and that’s up to people to propose it so that it makes sense.”
Assuring the security, the William Hinman, the SEC Director of Corporation Finance, said that in his view, Ethereum is completely decentralized to the point, but it doesn’t really qualify as security at present. Thus, it could be a great chance for the new token projects to make their mark in the market.