Canadian Regulators: 'Many' ICO Tokens Meet Securities Definition

From Coindesk

Securities regulators in Canada have released a wide-ranging statement on initial coin offerings or ICOs.

The staff notice on "Cryptocurrency Offerings" from the Canada Securities Administrators (CSA) – an umbrella group composed of the country's regional and local securities watchdogs – provides the clearest indication yet as to how regulatory bodies plan to oversee the emerging funding model.

The release comes after regulators in Ontario published an advisory on ICOs in March, and just under a month after the US Securities and Exchange Commission stated that its rules may apply to some token sales.

The notice outlines the requirements for companies involved in the launch and management of ICOs, as well as the exchanges that later list those assets for trading. Perhaps most notably, it reveals that "many" of the digital tokens investigated by regulators in Canada fall under the definition of a security, thereby triggering a range of legal requirements.

As the notice states:

"We have received numerous inquiries from fintech businesses and their legal counsel relating to ICOs/ITOs. With the offerings that we have reviewed to date, we have in many instances found that the coins/tokens in question constitute securities for the purposes of securities laws, including because they are investment contracts. In arriving at this conclusion, we have considered the relevant case law, which requires an assessment of the economic realities of a transaction and a purposive interpretation with the objective of investor protection in mind."

Read more: https://www.coindesk.com/canadian-regulators-many-ico-tokens-meet-securities-definition/

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