The Securities & Exchange Commission (SEC) ruled that “…that issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies. Those participating in unregistered offerings also may be liable for violations of the securities laws. Additionally, securities exchanges providing for trading in these securities must register unless they are exempt.”  The July 25, 2017 news release entitled “SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities” explain that the SEC’s Report:

…stems from an inquiry that the agency’s Enforcement Division launched into whether The DAO and associated entities and individuals violated federal securities laws with unregistered offers and sales of DAO Tokens in exchange for “Ether,” a virtual currency.

The DAO has been described as a “crowdfunding contract” but it would not have met the requirements of the Regulation Crowdfunding exemption because, among other things, it was not a broker-dealer or a funding portal registered with the SEC and the Financial Industry Regulatory Authority

The SEC news release included these comments from William Hinman (SEC Director of the Division of Corporation Finance):

Investors need the essential facts behind any investment opportunity so they can make fully informed decisions, and today’s Report confirms that sponsors of offerings conducted through the use of distributed ledger or blockchain technology must comply with the securities laws,

Obviously the SEC will continue to review ICOs closely.

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