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

Requirements for Raising Money through an Initial Coin Offering (ICO) in Utah

If you are planning to raise money through an initial coin offering (ICO) in Utah, you must comply with the securities laws of the state. In Utah, the Division of Securities regulates the offer and sale of securities, including digital assets such as cryptocurrencies [1]([1]).

To avoid violating securities laws in Utah, you must ensure that your ICO does not involve the offer or sale of securities. The Utah Uniform Securities Act defines a security as “an investment contract; a note; a stock; a treasury stock; a bond; a debenture; evidence of indebtedness; a certificate of interest or participation in a profit-sharing agreement; an investment in a common enterprise; a viatical settlement contract; a fractionalized or undivided interest in oil, gas, or other mineral rights; a put, call, straddle, option, or privilege on a security, whether or not it is evidenced by a written instrument; or a membership interest in an LLC or other entity” [1]([1]).

If your ICO involves the offer or sale of securities, you must comply with the registration and disclosure requirements of the Utah Uniform Securities Act. This includes filing a registration statement with the Division of Securities and providing investors with a prospectus that contains detailed information about the offering and the risks involved [1]([1]).

It is important to note that the SEC has taken enforcement actions against companies that have conducted fraudulent ICOs or offered unregistered securities through ICOs [1]([2]). Therefore, it is crucial to consult with legal counsel to ensure that your ICO complies with both state and federal securities laws.

In summary, to raise money through an ICO in Utah without violating securities laws, you must ensure that your ICO does not involve the offer or sale of securities. If it does, you must comply with the registration and disclosure requirements of the Utah Uniform Securities Act and consult with legal counsel to ensure compliance with federal securities laws.

Source(s):
Jurisdiction

Utah