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Fenwick’s Mike Dicke Discusses New SEC Guidance on Digital Tokens

April 05, 2019

Fenwick securities enforcement co-chair Michael Dicke spoke with The Recorder about the SEC’s new guidance on when a digital token can be considered a security, as well as current litigation trends involving digital assets and cryptocurrency.

Dicke explained that the new guidance “essentially synthesizes and puts a sharper point on numerous factors the SEC has discussed in enforcement actions and speeches,” although he noted that the April 3 guidance does contain some new points.

For instance, Dicke noted that “one new aspect is that the guidance talks specifically about how to judge whether tokens, which were once securities, when issued may no longer be considered securities in later transactions because the associated blockchain project has become decentralized or otherwise evolved away from reliance on the efforts of a key group of people.”

“But mostly, the guidance reaffirms that the SEC will continue to look to the Howey test, and that the inquiry into whether a particular offering or sale of a digital asset constitutes a securities offering remains a facts and circumstances examination of multiple factors,” Dicke, formerly the head of enforcement for the SEC’s San Francisco regional office, continued.

The full article is available through The Recorder (subscription required).

To learn more about SEC activity, also see Dicke’s recent interview with The Recorder on the Blockvest decision, as well as his article discussing the case and his piece about the SEC’s first ever enforcement actions against cryptocurrency firms for failing to register as a broker-dealer and an investment company.