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Last updated on September 6th, 2019 at 10:18 am

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The U.S. Securities and Exchange Commission (SEC) released a new regulatory guideline for token issuers.

According to the document— there exists guidelines on how and when these cryptocurrencies may fall under securities classifications. The document focused more on token issuers guildline and investors participation.

SEC Director of Corporation Finance William Hinman, first revealed that SEC is working on a new guidance for crypto tokens last November. Other members of the securities agency, including FinHub head Valerie Szczepanik and Commissioner Hester Peirce, have repeatedly said that SEC staff was working on the securities document.

The aim of the guidance is to protect investors from being victims of fraud. Considering the state of cryptocurrency activities with no clear guildlines or rules for investors or token issuers. The released documentation will help to effect a more safe ground for investor engagement. It will also encourage projects to deliver their products as agreed with its investors.

DLT framework
The framework states steps and factors to be considered by token issuers before evaluating whether or not their token falls under securities. These steps or considerations includes, whether a single group or individuals entities are responsible for some tasks within the network. Whether a group or an individual is supporting or is in charge of a digital asset.

The criteria suggested for adoption includes whether:

1.The “distributed ledger network and digital asset are fully developed and ready for use.
2. The token is focused on one particular use case rather then speculation.
2. “Possibilities for adoption” in the token’s value are limited.
3. If billed as a currency,

4. The token can serve as a store of value.

This guideline provides some legal clarity for token issuers. But isn’t not legally binding on anyone.

According to SEC, this guideline is a view from the SEC staff and doesn’t carry any legal weight on binding on any token issuer or participants.

About The Author

By Tony Chimdiuto

Content Developer | Blogger | SEO Manager | Web Administrator | Web Designer | Copyrighter | Journalist| diutouche@outlook.com

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