Before you get too excited, note what it says in fine print at the end:
“This framework represents the views of the Strategic Hub for Innovation and Financial Technology […] of the Securities and Exchange Commission. It is not a rule, regulation, or statement of the Commission, and the Commission has neither approved nor disapproved its content. Further, this framework does not replace or supersede existing case law, legal requirements, or statements or guidance from the Commission or Staff. Rather, the framework provides additional guidance in the areas that the Commission or Staff has previously addressed.”
So it’s a bit like “…you can’t park near the fire hydrant” – but how far is near?
The framework was cobbled together by SEC Commissioners Valerie Szczepanik, Senior Advisor for Digital Assets and Innovation aka “crypto czar” and Bill Hinman, director of the SEC’s Division of Corporation Finance.
Apparently, it’s an analytical tool that will help ICO issuers sort out if they will do jail time or not. But it’s a little late, the ICO ship left the harbour last year.
However, it’s great that they go into great detail how Digital Assets play out with the Howey test – which has been an ongoing debate for years. And they are inviting issuers who have any issues to contact them at https://www.sec.gov/finhub which is a breakthrough – it’s been years of silence on this issue, never mind dialogue.
- Investment of money: They bought the orange groves with real cash (U.S. dollars).
- Common enterprise: The orange groves were managed under Howey’s company (i.e., a common enterprise).
- You expect profits because of someone else’s work: Critically, the investors did not have to tend to the oranges themselves; Howey’s people did all the work.
CEO of MediaShower John Hargrave popped a great hypothetical in my inbox today which helps unpack the paper:
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