Match White Paper and Token Find Gray Areas in Security TokensOctober 18, 2018
The mistakes in the utility tokens were realized in the year 2018. This led to the coming of tokenized securities and the rise of Security Token Offerings (STO). Klayman states that there are several gray areas to be addressed with respect to comes to security tokens.
Leaseum Partners offer professionally managed security tokens to high net worth individuals.
Even in a scenario where the token sale is launched to U.S. investors, the presumption is that such token sale is equal to the sale of securities; however, still, there are a lot of unanswered questions.
Because by applying the current US Federal Securities Law the digital tokens are not a perfect fit. These tokens also bring up several important issues specifically with respect to the flow back of the tokens into the United States, both from regulated and unregulated exchanges across the world.
The initial token sales are made to non-U.S. persons. Even then there is a need for filing under SEC which she stated as follows, “Requirements to file reports periodically with the SEC under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); the risks of inadvertently becoming an investment company under the Investment Company Act of 1940, as amended (the “40 Act”); and compliance with transfer agent and broker-dealer registration requirements.”
In reality the security tokens are considered to be a growing trend in the US and countries; however, in Mata, where there are regulations, the jurisdiction is still seeing a great deal of ICOs. Despite, according to Dalli, there continues to be are still legal uncertainties.
Dalli stated, “The utility token concept continues to be in the initial stages. There are situations left without a solution. And regulating security tokens is easier than regulating utility tokens. When the asset is introduced with access to the company’s product, in most cases the financial authorities are not going to investigate it.”
She feels that every kind of crypto project should be brought to the jurisdiction in Malta. She states that the Maltese Government has a sound legal system, which does not come with surprises the sooner after the launch of the initial coin offering (ICO).
When the token generating events are issued in Malta, the jurisdiction makes it very clear as to the kind of jurisdictions that will be at the receiving end. It makes it very clear if the residents are allowed to participate in the investing or not in the crowdfunding process. With respect to investors, they state that one will have to be careful and they need to look into the white paper. She issued a warning by stating, “By looking at the how ICOs are advertised – if it sounds too good to be true, then it probably is.”
Any ICO coming to Malta for the launch will be matched for with its white paper very carefully. Security tokens are an important area where crypto lawyers are increasingly finding it interesting and worthy of study.