SEC issues statement on digital asset securities issuance, investment and trading

On November 16, 2018, the Securities and Exchange Commission (“SEC”) issued a statement on the application of federal securities laws to the issuance and trading of, and investment in, digital asset securities. While the statement encourages technological innovations that benefit investors and capital markets, it emphasizes that market participants must still adhere to federal securities laws when dealing with new technologies (such as blockchain and other distributed ledger technologies) in connection with digital asset securities. The statement highlights several recent SEC enforcement actions involving the application of federal securities laws to new technologies. It notes that the issues raised in these actions generally fall into three categories: initial offers and sales of digital asset securities (including initial coin offerings (“ICOs”), investment vehicles investing in digital asset securities, and secondary market trading of digital asset…

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