If you require legal expertise on SEC compliance issues for your cryptocurrency transactions or blockchain company, get advice from a team of SEC blockchain and crypto compliance lawyers.
SEC's Take on Cryptocurrencies and Blockchain
The SEC has intensified investigations and enforcement actions on entities and individuals who don't comply with existing federal regulations applicable to crypto transactions and blockchain companies. If you/your company transacts in crypto, don't wait to hear from the SEC.
The agency is among those leading in cryptocurrency regulation enforcement actions. Alongside other federal agencies like the DOJ, FBI, IRS, and FinCEN, individuals and entities are being investigated and charged for operating blockchain companies or transacting in cryptocurrency without being compliant with applicable federal securities laws.
Being proactive on blockchain and crypto compliance is your best defense against SEC enforcement actions like hefty fines and possible jail time.
Luckily, Blockchain Lawyer has assembled the best team of SEC compliance attorneys and experts on blockchain and cryptocurrency matters. Our team has decades in combined private and government practice experience.
We take an interdisciplinary approach coupled with our blockchain and crypto transactions knowledge and offer our clients comprehensive advice. We can also represent clients with SEC compliance charges relating to their cryptocurrency and blockchain dealings. Contact us today.
SEC on Cryptocurrency ICOs
The SEC (Securities Exchange Commission) enforces regulation over activities (by individuals and entities) regarding conduct on markets and exchanges that affect US capital markets and investors. Cryptos operate in a market of their own with unique characteristics and risks. In fact, the cryptocurrency market has fewer protections for investors than other markets. The SEC understands this, which is why the agency has increased focus on cryptocurrency and related activities.
This realization has made the agency come on record over its leading role in the industry. However, there are no concrete rules or regulations specifically about cryptos, digital asset transfers, ICOs, blockchain companies, etc.
The SEC has a particular interest in ICOs (or Initial Coin Offerings), given their current popularity and risks of such offerings. ICOs are IPOs for cryptocurrencies. They raise funds for projects and present new investment opportunities for the public. However, launching an ICO automatically attracts the SEC's attention.
Unless the ICO doesn't require SEC registration (i.e., it enjoys exemption), an investigation is likely to happen. SEC registration is mandatory for ICO offerings that qualify as security offerings. You need an SEC compliance attorney to avoid SEC registration or meet compliance guidelines.
SEC Enforcement Division
If you don't register your ICO with the SEC when you should, the SEC's enforcement division will initiate investigations in most cases, given the current SEC chair – Gary Gensler has already likened the cryptocurrency world to the “Wild West." Resulting SEC investigations can be on fraud, misconduct, or other federal securities law violations.
The Enforcement Division uses many provisions to investigate and charge persons or entities behind unregistered securities. The main ones include antifraud provisions and providing investment advice irregularly or acting without registering as a broker.
The SEC views all cryptocurrency issues to be within its mandate. This includes cryptocurrency exchanges facilitating digital assets trading and lending options.
Why Are Cryptocurrency Transactions Flourishing?
Lack of regulation can be attributed as a main factor behind cryptocurrency popularity. However, since the SEC and other federal agencies have stated their intentions on crypto regulation, entities, and persons behind cryptocurrency transactions will have to settle for other benefits.
Most importantly, there's a need for SEC and Blockchain compliance attorneys going forward to avoid SEC scrutiny. Since the SEC is particularly focused on ICOs and NFTs today, among other decentralized finance (De-Fi) technology applications, entities and individuals behind such projects need all the legal protection they can get.
There's a need for well-thought-out whitepapers with the necessary disclaimers that offers are not securities offerings. However, these should be combined with other legal tactics to legally avoid SEC registration.
The SEC's Howey Test and Why It's Important
The SEC utilizes a special test – the Howey Test – to decide if an ICO is supposed to be registered or not. If the test states that an offering is a securities offering, it must be subjected to SEC registration. The Howey Test looks for specific factors (dubbed Howey Factors). If the offering involves a money investment in an enterprise with expectation of profiting from the efforts of third parties, then that offering is a securities offering that should be registered.
The Howey Test application has been put to test by the SEC many times. In 2017, the SEC stated in its DAO report that the agency relied heavily on the test to determine if tokens that were issued and raised $150 million from the public were unregistered offerings.
For more on token/coin offering implications based on the Howey Test, contact our SEC crypto and blockchain compliance attorneys today.
How Will an Attorney Help with SEC Blockchain and Cryptocurrency Compliance Issues?
Blockchain and crypto compliance issues vary depending on case. At Blockchain Lawyer, we have experts in SEC Blockchain and cryptocurrency compliance offering the following assistance:
- Legal representation/defense in federal agency cases on SEC fraud and DOJ criminal investigations on criminal and/or civil matters.
- Legal help for companies and individuals launching ICOs. We can draft foolproof whitepapers and more.
- Advising on SEC compliance obligations on ICOs, NFTs, blockchain, securities, and more.
- Help when structuring ICOs to avoid classification as a security offering subject to SEC registration.
- Guidance for clients who are subject to federal investigations or federal subpoenas.
- Defense against SEC compliance litigation involving cryptocurrency securities fraud and related wrongdoing.
- Conducting internal audits on company structure and operations to reveal SEC compliance risks and violations.
- Drafting and implementing corrective plans for boosting federal securities law compliance.
We assist with these issues and more. Contact us with your specific needs.
Get Legal Help on SEC Blockchain and Crypto Compliance
SEC investigations and enforcement actions on matters regarding crypto transactions and blockchain companies can attract hefty fines and jail time. It can also damage your company's reputation.
Since the SEC hasn't hidden its intentions, you should be proactive. Don't wait for a federal investigation to be compliant. Contact us today. We have free SEC compliance sessions.