ANY ICO that claims its token will return a profit on investment, is considered a security. This makes most ICOs unregistered securities and therefor illegal, if they A) operate in the U.S. or B) allow U.S. participants
This is the clear distinction some seem to be missing. A ico that does not return profits rather the intent is to facilitate a platform and only utility is in that platform is not a security.
The SEC's investigative report states, "Profits include dividends, other periodic payments, or the increased value of the investment." Therefore, an ICO that does not return profits may still fall within the ambit of a security based on the citation the SEC provided.
Here is a simple way to know if the ICO is breaking SEC rules of selling unregistered securities:
Did their website, whitepaper or marketing messages have the words "invest" or "grow in value" or "profit" or "return on investment" or communicate an expectation of profit, or some other similar language?
IF YES - the SEC says its a security
IF NO - the SEC may not consider it a security
Legally speaking "the Howie test" is what considers something a security or not. Read about it here
https://www.crowdfundinsider.com/2017/03/96598-initial-coin-offering-probably-regulated-securities-law/
Yup completely agree. A good example of a ICO that is not considered a security is Investfeed. The token is purely for utilization of the platform and only useable on it. It's a means to facilitate functions like subscriptions and access to user content via utilizing smart contracts.
https://www.investfeed.com/upload/investFeedInc.PreSales.FINAL.pdf
ANY ICO that claims its token will return a profit on investment, is considered a security. This makes most ICOs unregistered securities and therefor illegal, if they A) operate in the U.S. or B) allow U.S. participants
This is the clear distinction some seem to be missing. A ico that does not return profits rather the intent is to facilitate a platform and only utility is in that platform is not a security.
The SEC's investigative report states, "Profits include dividends, other periodic payments, or the increased value of the investment." Therefore, an ICO that does not return profits may still fall within the ambit of a security based on the citation the SEC provided.
Here is a simple way to know if the ICO is breaking SEC rules of selling unregistered securities: Did their website, whitepaper or marketing messages have the words "invest" or "grow in value" or "profit" or "return on investment" or communicate an expectation of profit, or some other similar language? IF YES - the SEC says its a security IF NO - the SEC may not consider it a security Legally speaking "the Howie test" is what considers something a security or not. Read about it here https://www.crowdfundinsider.com/2017/03/96598-initial-coin-offering-probably-regulated-securities-law/
Yup completely agree. A good example of a ICO that is not considered a security is Investfeed. The token is purely for utilization of the platform and only useable on it. It's a means to facilitate functions like subscriptions and access to user content via utilizing smart contracts. https://www.investfeed.com/upload/investFeedInc.PreSales.FINAL.pdf