There is no shortage of debate around what constitutes a security, particularly in this new age of digital assets. Our friend and fintech thought leader Dara Albright, Advisor for EisnerAmper, tackles this important topic in the piece she has penned below. She notes that the manner in which the SEC has addressed this topic remains frustratingly slow and ambiguous, as evidenced by the “unofficial” staff guidance on digital currencies that the regulator’s Division of Corporate Finance issued earlier this month. As we have often noted, uncertainty is never good for markets, and the SEC has, once again, failed to provide OFFICIAL guidelines for this sector. Perhaps they don’t want to legitimize it by providing clear guidelines? Just a thought. Anyway, read up on Dara’s important piece on the topic below.
By Dara Albright, Advisor – EisnerAmper
Remember the game that kids used to play, where they would pick off the petals of daisies to determine whether their crush loves them, or loves them not?
Well, ever since the rise of digital assets, it feels as though the SEC has been playing a similar game in order to establish what constitutes a security.
And, according to some recent statements emanating from the Commission, the last petal standing seems to indicate that digital assets are indeed securities.
Well, sort of.
Earlier this month, and after much petal plucking, the SEC’s Division of Corporate Finance released a long-awaited – yet “unofficial” – staff guidance on the treatment of digital assets. As acknowledged by the Commission, the framework is not intended to be a comprehensive overview of the laws, but rather a mere framework offering a number of questions intended to help market participants assess whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset.
The framework is neither a rule, regulation, legal advice or even a statement of the Commission itself. When you get to the meat and potatoes, it’s clear that the framework is nothing more than 13 pages of “staff views” and disclaimers that prompt more questions than it supplies answers….