Ask Reggi Your Question Now
Can I raise money through an initial coin offering (ICO) without violating securities laws in California? What are the requirements?
Requirements for Conducting an ICO in California
In California, an initial coin offering (ICO) may be subject to securities laws. The California Department of Business Oversight (DBO) has issued guidance on ICOs, stating that “depending on the facts and circumstances, an ICO may involve the offer and sale of securities subject to the registration and qualification requirements of the Securities Act of 1933 and California securities laws.” [4]
To determine whether an ICO involves the offer and sale of securities, the DBO considers the economic realities of the transaction, including the investment of money in a common enterprise with the expectation of profits to be derived from the efforts of others. [4]
If an ICO involves the offer and sale of securities, the issuer must comply with the registration and qualification requirements of the Securities Act of 1933 and California securities laws. This includes filing a registration statement with the Securities and Exchange Commission (SEC) and providing investors with a prospectus that discloses all material information about the offering. [4]
Conclusion
In summary, whether an ICO violates securities laws in California depends on the specific facts and circumstances of the offering. If the ICO involves the offer and sale of securities, the issuer must comply with the registration and qualification requirements of the Securities Act of 1933 and California securities laws. It is recommended to consult with a legal professional to ensure compliance with applicable laws and regulations. [4]
Source(s):
Jurisdiction
California