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Can I raise money through an initial coin offering (ICO) without violating securities laws in Florida? What are the requirements?

Requirements for Conducting an Initial Coin Offering (ICO) in Florida

An initial coin offering (ICO) is a method of raising capital by issuing and selling digital tokens or coins to investors. ICOs are subject to securities laws in Florida and must comply with the state’s regulations to avoid violating securities laws.

To conduct an ICO in Florida, the following requirements must be met:

  1. Register with the Florida Office of Financial Regulation (OFR): ICO issuers must register with the OFR and provide detailed information about the offering, including the terms and conditions of the sale, the identity of the issuer, and the risks associated with the investment.
  2. Comply with federal securities laws: ICOs may be subject to federal securities laws, including registration requirements and anti-fraud provisions. ICO issuers must comply with these laws to avoid violating securities laws.
  3. Provide disclosures to investors: ICO issuers must provide investors with detailed disclosures about the offering, including the risks associated with the investment, the terms and conditions of the sale, and the identity of the issuer.
  4. Use a qualified custodian: ICO issuers must use a qualified custodian to hold the digital assets raised in the offering.
  5. Comply with anti-money laundering (AML) and know-your-customer (KYC) requirements: ICO issuers must comply with AML and KYC requirements to prevent money laundering and terrorist financing.

Failure to comply with these requirements may result in violating securities laws in Florida.

[3] provides an example of an ICO that violated securities laws by offering and selling digital assets without registering with the OFR. The issuer was charged with violating Sections 5(a) and 5(c) of the Securities Act.

[2] provides a legal primer on securities regulation and ICOs, which may be helpful in understanding the legal requirements for conducting an ICO in Florida.

Therefore, to raise money through an ICO in Florida without violating securities laws, ICO issuers must register with the OFR, comply with federal securities laws, provide disclosures to investors, use a qualified custodian, and comply with AML and KYC requirements.

Source(s):
Jurisdiction

Florida