The United States Securities and Exchange Commission (SEC) has sent a notice to officials from the TurnKey Jet project informing them that they do not treat the project’s token, TKJ, as securities, Forbes reported.
The SEC issued a no-action letter to TurnKey Jet, saying that their conclusion was formed from the facts represented by the project in the latter’s initial statements,
Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel that the Tokens are not securities, TKJ offers and sells the Tokens without registration under the Securities Act and the Exchange Act.
With the decision, the SEC expects that the project will not use any funds gathered from the ICO to develop the platform. It also demands that the tokens be functional at the time that they are sold, and priced at 1 USD per token for the life of the program. Furthermore, the project is expected to emphasize the functionality of the token in its marketing, as opposed to the potential of profit for investors.
TurnKey Jet offers private jet services including hiring staff for flights. Reservations are made with crypto. While the SEC will obviously look at ICOs and tokens on a case by case basis, the precedent set with TurnKey Jet offers some hope for other projects that stay within the bounds of the SEC’s expectations.
The decision is something of a major one for the market in general, as there has been debate raging for sometime as to whether certain tokens are securities or not, and if yes, whether the securities laws applied to traditional assets would be applied to digital assets classified as securities.
In order for a token to be considered a security it must pass the Howey Test, which requires an asset to meet 4 very specific criteria. Earlier this year a few SEC officials, including SEC Chairman Jay Clayton, confirmed that they did not believe that Ethereum was a security, which brought some relief to investors as it meant that Ethereum’s growth and development would not be hampered by legal stumbling blocks.
Meanwhile co-founder of the Ethereum, Vitalik Buterin, did not show much concern when asked by Laura Shin what would happen if Ethereum did fall under the scanner, to which he replied that Ethereum had formed a legal team that would handle any situation that arose.
