Investor Bulletin: Initial Coin Offerings - SEC offers clarity
The SEC just made an announcement on their position about ICOs. I'm not a lawyer but it sounds like ICOs can be legal but it depends on the nature of the ICO. Some ICO tokens may be classified as securities and hence stricter require regulation in the US.
SEC Announcement
Read here: Investor Bulletin: Initial Coin Offerings
The important parts as I see it:
"in certain cases, the tokens or coins will be securities and may not be lawfully sold without registration with the SEC or pursuant to an exemption from registration."
"Depending on the facts and circumstances, the offering may involve the offer and sale of securities. If that is the case, the offer and sale of virtual coins or tokens must itself be registered with the SEC, or be performed pursuant to an exemption from registration." (highlighting is mine)
"If the virtual token or coin is a security, federal and state securities laws require investment professionals and their firms who offer, transact in, or advise on investments to be licensed or registered."
Not all ICO tokens are securities, but if your ICO token can be deemed to be a security then there are additional regulations required by state / federal laws. It sounds like you can apply for an exemption but I can't imagine that being appealing for any.
Other countries
If I was to pick a country to launch an ICO it wouldn't be the US and probably not the UK.
The most supportive countries of ICOs seems to be Switzerland and Singapore. There have also been rumours of Russia being supportive in the future too. However, worth considering that as little more than a rumour for now.
"In Switzerland, business is regulated by the Swiss Financial Market Supervisory Authority, or FINMA, but cryptocurrency companies do not require any specific approval or license, the report finds. Under the law, cryptocurrencies are assets rather than securities."
Source: The State of ICO Regulation? New Report Outlines Legal Status in 6 Nations
Also an interesting read:
For Blockchain Startups, Switzerland's 'Crypto Valley' is No New York
Disclaimer: I'm not a lawyer.
Disclaimer: this is not the opinion of my employer.
I had been wondering when the SEC would come out with a statement about this sort of thing. It sounds, to me, like they are trying to distance themselves from the whole market to an extent. This statement still doesn't make their position very clear, unfortunately.
It feels clearer to me at least. From discussions I’ve had in the community many people were expecting this. A couple of lawyers that I spoke to figured that ICOs could well be classified as securities depending on their nature. If the ICO token is a simple token then it is fine. If there is an implication of ownership or of promised future money (revenue share / dividends) then it would likely be classified as a security. This latest information from the SEC basically confirms that. The folks I spoke to basically said that if it walks and talks like a security then it is likely to be classified as one.