The SEC Called About Our ICO, I Answered

[benjacoin]

A lot of you know that I'm working on launching an ICO early next week.

After the DAO news earlier this week, I sent an e-mail to the SEC to check in and see if they had any guidance. I didn't expect to hear back, but today they came calling.

I wrote about it on Medium, think that the community might find this interesting: https://medium.com/@andrewjchapin/the-sec-called-about-our-ico-i-answered-8cbbd31568ec

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[StinkyLover]

How do you answer this:

"It’s important to ask the question of whether there is an expectation of profit by the buyer of a token. If so, there’s trouble"

?

[benjacoin]

How do you answer this:

"It’s important to ask the question of whether there is an expectation of profit by the buyer of a token. If so, there’s trouble"

?

There are some instances where this is very obviously the case - especially with tokens that promise to pay dividends or invest in subsequent projects (especially things like real estate, etc.). ICOs/tokens like this fail the Howey Test right off the bat.

Tokens that have a utility, like those where it's necessary to use have tokens to use a service, are on the other end of that spectrum. The buyer motivation is function, not investment or gains on the value of the token.

[benjacoin]

Follow up to the article, our letter to the SEC that documents why we're a pre-order, not a security: http://benja.co/blog/2017/7/31/release-benjacoin-ico-event-a-pre-order-not-fundraise

[realdeanz]

so the SEC are in agreement with you that your ICO is a pre-order? Whats the difference between a pre order and an ICO?

[HughCaires]

So from what you gathered, as long as the primary point of the ICO is not profit but use towards some kind of service, the ico is not a security???

I ask because I am interested in an upcoming ICO for the food supply industry, Ambrosus, which I see as a chance for profit but also because block chain technology is essential towards regulating the food industry fairly. In this case, do you think they would consider Ambrosus a security?

I know you aren't a lawyer but I appreciate any insight as you have dealt with the SEC personally.

-HC

[qiwoman2]

Now the SEC is putting it's smelly nose in everything ICO this is going to make everything for us much more complex. Of course investors want to eventually make profit, that's what they invest in for in the first place. So now instead of profit we need to find another name and a crap load of other terminology. Isn't it just easier to do ICOS outside of the U.S.A and not allow U.S citizens to partake in the ICOS？ That would just get rid of the SEC once and for all correct?

[cryptomartin]

I don't think that it will really make things more problematic...

[Pab]

Now the SEC is putting it's smelly nose in everything ICO this is going to make everything for us much more complex. Of course investors want to eventually make profit, that's what they invest in for in the first place. So now instead of profit we need to find another name and a crap load of other terminology. Isn't it just easier to do ICOS outside of the U.S.A and not allow U.S citizens to partake in the ICOS？ That would just get rid of the SEC once and for all correct?

If you make ico what is not respond to sec rules than us based exchanges will not list that kind of tokens,you can read about it in bittrex articles,us exchanges has to follow otherwise sec can shutdown exch,and you will stay without your tokens  It is legal hacking

[realdeanz]

Now the SEC is putting it's smelly nose in everything ICO this is going to make everything for us much more complex. Of course investors want to eventually make profit, that's what they invest in for in the first place. So now instead of profit we need to find another name and a crap load of other terminology. Isn't it just easier to do ICOS outside of the U.S.A and not allow U.S citizens to partake in the ICOS？ That would just get rid of the SEC once and for all correct?

The SEC decisions will encourage other regulators around the world, some sort of regulation will be required for serious ico offers soon, i think.

[pearlmen]

A lot of you know that I'm working on launching an ICO early next week.

After the DAO news earlier this week, I sent an e-mail to the SEC to check in and see if they had any guidance. I didn't expect to hear back, but today they came calling.

I wrote about it on Medium, think that the community might find this interesting: https://medium.com/@andrewjchapin/the-sec-called-about-our-ico-i-answered-8cbbd31568ec

A lot of us don't know you will be launching an ICO next week because I don't know about it just now you have said it. Also, concerning the issue of SEC I dont know how you want to show us this. Is it that you will have to wait for a clearance certificate from SEC or since you have written them, then all coast is clear because I really want to understand how this new policy concerning ICO will work.

[benjacoin]

so the SEC are in agreement with you that your ICO is a pre-order? Whats the difference between a pre order and an ICO?

The SEC has not formally stated that - they have offered guidance around how to evaluate this ourselves and we based on that, we believe that we are in the clear.

Now the SEC is putting it's smelly nose in everything ICO this is going to make everything for us much more complex. Of course investors want to eventually make profit, that's what they invest in for in the first place. So now instead of profit we need to find another name and a crap load of other terminology. Isn't it just easier to do ICOS outside of the U.S.A and not allow U.S citizens to partake in the ICOS？ That would just get rid of the SEC once and for all correct?

The SEC is just doing their jobs and there are some very problematic ICOs - especially those that go on to invest in other assets (digital or otherwise) and pay a dividend. Those are clearly securities and it's a big problem that individuals think they can issue a clear security and not deal with any of the regulation.

I also don't think that the SEC is the end of the road here. Even if no US-based companies and no US-based individuals were involved in ICOs, I'm sure someone somewhere would pick up the regulatory slack... I just think they're waiting for the SEC to be a first-mover.

A lot of us don't know you will be launching an ICO next week because I don't know about it just now you have said it. Also, concerning the issue of SEC I dont know how you want to show us this. Is it that you will have to wait for a clearance certificate from SEC or since you have written them, then all coast is clear because I really want to understand how this new policy concerning ICO will work.

I'm just here sharing my experience, that's all. We're not waiting for a clearance or certificate, we're launching tomorrow but we think that we're in the clear based on their guidance.