As a securities market, cryptocurrencies involve a great deal more risk for investors due to the fact that there are fewer protections in place. The SEC doesn’t currently have any regulations over cryptocurrencies and initial coin offerings (ICOs) specifically, which means there is more opportunity for people to attempt to unlawfully dodge regulations. It’s vital to ensure that your offering is in full compliance with current regulations in order to avoid allegations of fraud.
Hart David Carson, aids investors and startups alike when it comes to dealing in cryptocurrencies. If you are making an ICO, you will need assistance when it comes to designing and marketing your offering in order to prevent entanglements with the SEC. If you are investing, it’s important to know what to look for to make sure your investment is sound.
Name vs. Substance
Often, entities making ICOs attempt to circumvent securities regulations by using different terms to define them. However, simply titling something a “currency” or “token” does not necessarily shield it from SEC regulations. If it looks or acts like a security, you can be certain that the SEC will apply and enforce their rules to the fullest extent possible.
Careful design of your offering will ensure either of the following:
- It cannot be considered a security
- It adheres completely to SEC regulations
Unless what you are offering is truly unique in nature and completely defies definition under the SEC, it will be far simpler to accomplish the latter. Hart David Carson can help you ensure full compliance with federal securities laws.
Trading Suspensions and Endorsements of ICOs
The SEC has recently made various trading suspensions against certain issuers based on claims about investing in ICOs, coins, and tokens. This type of suspension indicates a variety of possible issues, including microcap fraud or market manipulation. Companies may attempt to spread false or misleading information about their offering in order to artificially drive up the price of their stocks.
Endorsements of ICOs need to be done properly in order to avoid an SEC trading suspension or running aground of anti-touting laws. For instance, parties who endorse an ICO must disclose full information about compensation they receive for the promotion.
SEC Regulatory Compliance
If you are making an offering on the cryptocurrency market, odds are your offering will fall under SEC securities regulations. If it does, you will need to be able to comply completely with their rules. Otherwise, you’ll have to prove that what you are offering is not a security. In some cases, your tokens or coin offerings may not be technically considered “securities,” but as stated, simply labeling them as such won’t automatically indicate that they are not.
Our attorneys at Hart David Carson, are highly experienced in safeguarding securities, commodities, and other offerings and ensuring compliance with SEC regulations. When designing your ICO, coin, token, etc. for trade, we can help you make sure you avoid legal entanglements and adhere fully to the law.
For more information or to schedule a free consultation, contact us today.
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