Token issuers now have guidance from the US Securities and Exchange Commission (SEC). They have finally released their regulatory guidance, as it has been in the works for a year and a half now. The new guide will target outlines and tokens and how they fall into a securities category. Director of Corporation Finance at the SEC, William Hinman, mentioned plain and simple, “The guidance will assist token issuers with determining if their digital asset is a security or not.” The framework that has been used for this is the DLT framework. It’s a list of factors of what token issuers should consider when it comes to their asset being a security or not. Some of these factors are: expectation of profit, whether group entities or a single entity are responsible for certain actions within the network, or whether the group is making and helping a market for a cryptocurrency. The guidance also encourages token issuers to look at tokens that have been sold in the past to evaluate if they should have been considered securities. The guidance does have a disclaimer of not being a legal binding document, and should be used merely as a guideline. While the guidance describes securities classifications, there are many questions still unanswered. The SEC still has not answered how they will handle custody for broker-dealers that possess digital currencies.
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