Each country has certain regulating bodies that monitor the financial market and protect its citizens. If registering a company for ICO in the United States is in your immediate plans, then keep in mind that compliance with the rules issued by the American Securities and Exchange Commission is a must.
Two years ago, the Commission has already subtly reminded of the need to comply with US securities law when working with Blockchain-powered platforms and the next generation securities. The statement released by the regulator unambiguously outlined the approach to the sale of digital (alternative) assets, and detailed penalties for breaking the rules.
Do not be mistaken in definitions
Currently, it’s been a growing trend for companies to add digital elements to their securities in order to provide investors with more transparency.
If you want to issue digital assets in the United States, it is very important to first familiarize yourself with and strictly comply with the US federal securities laws. Crucially, do not make a mistake in the definitions and correctly determine when a digital asset is a “security” and how to register it, if, nevertheless, the asset is a security.
Registration of a company to work with ICOs in the United States is one of the conditions for legally conducting business if it is classified as an activity related to securities. The US regulator is looking beyond initial coin offerings when enforcing securities laws in the digital asset space.
For your info:
ICO is the process of issuing company tokens (the equivalent of shares in a traditional financial market) and placing them on a crypto exchange.
Violations and punishment
Platforms that operate as an “exchange marketplace” for securities trading must get authorized as a national securities exchange or be exempted from registration by the regulator.
If issuers trade alternative securities bypassing the rules, then the regulator can take very active steps to remedy the situation. The most recent examples of this are the moves taken against AirFox and Paragon.
AirFox is a peer-to-peer financial services program. Paragon is implementing a blockchain-based business. Both companies held an ICO and immediately received a warning from the regulator that ICOs could be classified as securities. Therefore, first what the companies needed to do was to immediately register tokens as securities. Furthermore, they had to provide compensations to investors who had purchased tokens in illegal offers.
Forex trading requirements
Forex trading is a risky endeavor. Therefore, registration of a forex company in the United States is necessary for companies wishing to conduct business in this area. Organizations that deal with the issuance of digital assets and the secondary trading of digital assets can also act as a "broker" or "dealer." Please note that our company specialists provide comprehensive assistance in the registration of a forex broker in the US.
When issuers and dealers of alternative assets fail to comply with applicable laws, they are subject to severe sanctions.
Australia is taking action to terminate ICOs due to the use of illegal unregistered managed investment schemes, misleading practices, and failure to obtain an Australian financial services license when needed. We have yet to see statements about digital asset trading in this jurisdiction, as the US regulator fully supports the Australian government's policies.
If you are planning to trade alternative assets in Australia, you should look out for obligations under the Australian Corporations Act or the general law that may apply.
If you intend to register a company for ICO in the USA or obtain a financial license in Australia, the IQ Decision UK team is at your service.