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Comment by a_d | Hacker News Reader

How does one execute an ICO that is compliant? Can you please point to specific details or methodology?

While I cannot give legal advice, generally the only acceptable path is for a Reg-D filing with the SEC. This means that your token is considered a security, but the filing is technically an "exemption" filing.

So far I believe the only other projects that have pursued Reg-D filings did so under the SAFT framework, which is currently under scrutiny by the SEC. We may be the first project to raise money for a token that itself is a transferrable security, and pursue filing under Reg-D.

honestly it's a bit of a mess right now

Be careful regarding its transferability.

Under rule 144 you can have your original investors trade it after a lock-up period. But even with that, Reg D securities are not transferred very easily.

I had to learn all this when raising money for Qbix the last 7 years.

You MAY be able to have some sort of derivatives which are traded, like taxi medallion leases, and maybe they won't be considered securities since there is no expectation of profit (but then why do people buy them?)

IANAL

Under current rules, after 1-yr lockup period investors are able to sell to other accredited investors.

Hopefully by then we'll have some new, regulated exchanges that can automate the process.

Hopefully the investors realized that their lockup may extend longer than they thought.

I am not a lawyer, but my understanding is that accredited investors do not need an exchange or a regulated entity to sell their tokens to other accredited investors. They have some compliance burden, but can, under the right circumstances, comply with that burden absent a regulated exchange or broker dealer.

I am not a lawyer, and the above paragraph may be incorrect.

Edit: Why did this get downvoted? That is the right answer to the question!

Even so, that's what SAFTs tried to do, but it looks like the SEC may be concerned about their structure.

That's an insufficient answer considering how many different flavors of registrations the SEC has; e.g. Reg A+ vs. Reg D.

It's extremely simplistic. In some circumstances, the coin offered in an ICO might not be a security, for instance, and then it doesn't come under the SEC's jurisdiction.

They have said that pretty much every coin offered in an ICO does qualify as a security.

Every coin the chair has looked at.

The TLDR is that you just make sure that you are only selling your unreleased token to qualified investors.

A qualified investor is someone who has a million dollars in assets or something like that.

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