Apr 4, 2019 06:00 UTC
Apr 5, 2019 at 12:57 UTC
SEC Sends Notice to TurnKey Jet as its Tokens are Not Securities
The U.S. Securities and Exchange Commission has sent a no-action letter to officials from the TurnKey Jet project confirming them that they don’t treat the project’s token, TKJ, as securities.
The SEC issued a notice to TurnKey Jet, saying that their conclusion was formed from the baseless facts represented by the project in the latter’s initial statements –
“Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel that the Tokens are not securities, TKJ offers and sells the Tokens without registration under the Securities Act and the Exchange Act.”
With the decision, the SEC anticipates that the project won’t use any funds gathered from the ICO for developing the platform. Also, it demands that the tokens to be functional at the time that they are priced at $1 per token for the life of the program. Moreover, the project is anticipated to emphasize the functionality of the token in its marketing, on the contrary to the potential of profit for investors.
TurnKey Jet provides private jet services incorporating hiring staff for flights. The reservations for the flight are made via cryptocurrency. While the SEC will surely look at ICOs and tokens, the precedent set with TurnKey Jet provides some hope for the other projects which stay within the bounds of the SEC’s expectations.
This is a major decision for the market in general since there has been a debate raging for some time as to whether specific tokens are securities or not, in case yes, then whether the securities laws applied to traditional assets would be applied to digital assets classified as securities.
In order for a token to be taken as securities, it must pass the Howey Test, requiring an asset to meet 4 criteria. Earlier this year, a few SEC officials, including the chairman Jay Clayton, confirmed that they didn’t believe that Ethereum was security, which also brought some relief to investors as it meant that Ethereum’s growth and development wouldn’t be hampered by legal stumbling blocks.
In the meantime, the ethereum co-founder, Vitalik Buterin, didn’t show much concern on being asked by Laura Shin what would happen in case Ethereum did fall under the scanner.
“Ethereum had formed a legal team that would handle any situation that arose,” he replied.