SEC Promises Clarity On Its Definition Of Security Token Offerings

Blockchain, Investing, News, Regulation | November 6, 2018 By:

A senior Securities and Exchange Commission director said Monday that the agency will soon issue specific guidelines on cryptocurrencies and when they may be classified as securities.

SEC director William Hinman made the remarks at the D.C. Fintech Week conference, where he said the SEC plans to release “plain English” guidance on token offerings. Developers have been clamoring for such instruction, with many saying the lack of it has held back industry growth. No timeframe for the guidelines was mentioned

“The idea is a plain English instrument that people can look at and they’ll bring together sort of my Howey-meets-Gary speech,” said Hinman. “We’ll elaborate on that in a very plain English way, so ‘Do I think I have a security offering?’ (will allow you to ) look at that guidance and you should be able to sort things out.”

Hinman also touted the SEC’s new FinHub, which is an instructional site for securities and security offerings.

“Once you determine whether you have a security, we’re going to have in that guidance, ‘How do I go about registering?’ and ‘How do I go about doing an exempt offering,'” Hinman said.

The SEC guidance will also provide clarity on secondary market transactions, Hinman said, adding the SEC will determine if an offering is a security using the following general guidelines:

“If someone’s offering an instrument for money or other consideration to a third party, and that third party expects the offerer to generate a return or so something that will increase the value of the coin or token or whatever they want to call it, and there’s that expectation of return, we’re generally going to see that as a securities offering,” Hinman said.