With the SEC issuing regulations over the cryptocurrency industry, Morrison & Foerster partner Alfredo B.D. Silva believes it wouldn’t be surprising for other jurisdictions to follow suit. And because many initial coin offerings served only to raise capital, investors used digital tokens strictly for speculating that they would increase in value.
“These are marketed using language familiar to investors: non-dilutive token equity, initial coin offerings. The SEC pays attention to that,” he said in the GlobalCapital article “SEC puts crypto on notice with DAO verdict.”
Additionally, Joshua Klayman advises companies that any exchanges involving the U.S. are subject to regulation.
“Taking on DAO indicates that being registered abroad is no protection for an exchange if any transactions involves U.S. citizens,” she said in the GlobalCapital article “SEC puts crypto on notice with DAO verdict.”
The regulations could also affect private citizens, according to Daniel R. Kahan; they may need to register as securities sellers if they wish to sell purchased coins from ICOs in the secondary market.
“If a token is deemed a security, then owners will have to be careful about finding exemptions to sell it privately. It could be a big concern for purchasers who looked at tokens as an investment,” he said.
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