SEC Issues ‘No-Action Letter’ To TurnKey Jet Confirms TKJ Tokens Are Not Securities
The U.S. Securities and Exchange Commission (SEC) has confirmed that it won’t be taking any action against Florida-based firm TurnKet Jet in relation to the sale of the startup’s TKJ tokens.
SEC’s announcement came via a “no-action letter” issued to the startup on April 3 and essentially confirms that the TKJ tokens would not constitute a security offering when sold to the public via an initial coin offering (ICO).
In its letter, the regulatory watchdog references a letter sent on April 2 by the startup’s lawyer. The SEC predicates its decision upon this letter and on a number of considerations regarding TurnKey Jet’s platform.
For one, the regulator considered that the project is already “fully developed and operational,” and that the funds raised will not be channeled towards the platform’s development.
The agency also notes that the TurnKey Jet offers its custom crypto tokens as being immediately usable, with their marketing premised on their utility, and not potential for future profitability.
Another reason cited is the token’s price during the sale offer. Per the letter, the TKJ will be sold at a fixed price of one dollar, with a user granted one dollar’s worth of service for every token they buy.
Additionally, the company will only acquire the tokens at a discount except for a court order demands these tokens be liquidated.
Reportedly, the startup will limit all TKJ transfers, only allowing transfers to another TKJ wallet and cutting out external wallets.
For these reasons, the token offering is likely not to pass the Howey Test and thus would not be deemed as securities.
A Forbes report has referred to SEC’s no-action letter as a “precedent-setting” moment for the crypto and blockchain sector, the first such letter to a company seeking to use crypto for fundraising.
Meanwhile, SEC has released a new framework that it hopes will help participants in the crypto and blockchain space establish whether or not a given digital asset qualifies as an investment contract, and thus a security.
Among those to work on the framework is the Commission’s senior advisor for Digital Assets Valerie Szczepanik aka “the crypto czar.”
Earlier this month, the SEC advertised for a crypto specialist, looking to hire an attorney advisor who would work with its Division of Trading and Markets. The new hire would reportedly be tasked with formulating a comprehensive plan targeted for the crypto space, specifically, digital asset securities.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.