On April 3, the United States Securities and Exchange Commission (SEC) has issued a no-action letter to TurnKey Jet, confirming that the TKJ tokens issued during the startup’s initial coin offering (ICO) are not securities.
In the letter, the regulator specifies that it considered that the platform will be fully developed and operational at the time the tokens are sold, and the funds won’t be used to develop the platform. It also mentions that the tokens will be immediately usable and have been marketed for their utility, not potential profits.
Other reasons cited are that the price of the tokens during the sale will be fixed at one dollar, each token will be granting one dollar worth of service and that the company will only purchase them at a discount unless a court orders it to liquidate them. The SEC also notes that since TKJ transfers will be limited to TKJ wallets only and cut out from wallets external to the platform, it does not consider the tokens to be securities.
Lastly, the regulator specifies that their position is based on the representations made by the company in a letter previously sent to the SEC, dated April 2. Forbes reported on the SEC’s letter, claiming that it is the first no-action letter sent to a cryptocurrency business, and defining the document as historic.
The SEC has published a framework to help market participants ascertain whether or not a digital asset is deemed to be an investment contract, and therefore a security.
At the beginning of the current month, news broke that the SEC is also looking to hire a crypto specialist attorney advisor for its Division of Trading and Markets who will reportedly be tasked with establishing a plan for dealing with crypto and digital asset securities.