Following the U.S. Securities and Exchange Commission (SEC) including tokens as securities making most ICOs close their doors to United States residents, Canadian regulators agreed that ICO tokens meet securities definition.
What does this mean? North America is pulling itself out of the ICO market.
Who is affected?
This week securities regulators in Canada published a statement on ICOs in which they define the digital tokens as securities that involve a clear a range of legal requirements for:
- Companies launching an ICO
- Exchanges that list the issued tokens
What are the conditions?
Once a security is by definition a proof of ownership (digital in this case) that has been assigned a value and may be sold.
These companies need to meet the following conditions:
- Disclose a set of content requirements in a predetermined format
- Ask each investor for a signed risk acknowledgment
- Comply with certain investment limits
- Provide audited annual financial statements
- Follow the resale imposed restrictions
- Fill the required reports to the securities regulatory authorities
This is a HUGE amount of work required in order to make the tokens available in these countries. Predefined format, audited statements, reports? These require legal involvement which also adds a nice bill along the time and effort put in.
Good Guy Canada?
Although, the regulators come in their help offering guidance for this firms founded in Canada.
What happens to the other ICOs who wish to make their tokens available to Canadian residents?
They should consider signing up for a regulatory sandbox, in which their products will be tested in a limited setting.
Are you living in North America? Consider limited ICO options in the future.
Are you running an ICO outside of North America? Consider limiting your crowdsale to the other 6 continents if you don’t want to get involved in a long paperwork process.