SEC Releases Framework for “Investment Contract” Analysis of Digital Assets

As part of a continuing effort to assist those seeking to comply with the U.S. federal securities laws, the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub), published a framework for analyzing whether a digital asset is a security.

On April 3, the SEC’s Director of Division of Corporation Finance, Bill Hinman, together with Senior Advisor for Digital Assets and Innovation, Valerie Szczepanik, announced the “Framework for ‘Investment Contract’ Analysis of Digital Assets”, noting its aim is to help determine whether a digital asset is a security and thus subject to US federal securities laws.

The announcement reads, “The framework is not intended to be an exhaustive overview of the law, but rather, an analytical tool to help market participants assess whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset”.

It also warns market participants to be aware that they may be conducting activities that fall under the SEC’s jurisdiction.