The US Securities and Exchange Commission has announced that the ICO token of Turnkey Jet is not security in a statement that warmed the heart of ICO watchers.
The April 3 release confirmed there would be no sanctions on the project as the TKJ token could not be classifies securities mainly because the regulator believes that the team is working on the development of the platform.
Utility is Key to SEC Approval
SEC made it clear that it believes that the platform would have been completed by the time the TKJ tokens are sold emphasizing that the team did not market it as a source of profit but based on the intrinsic utility value of the token.
Another reason cited by the regulator is that the price of each token has been fixed at one dollar implying that each of the tokens would be used to purchase a dollar worth of service. The company can purchase the tokens at a discount according to the SEC release. The only exception to this rule is if the court orders its liquidation.
Meant for Internal Use
Furthermore, to the advantage of the team according to the SEC release is that the token would be immediately usable and transferrable from one internal wallet to another within the TKJ ecosystem thereby ensuring that it is not necessarily a speculative instrument and so not considered securities.
First No-Action Letter
The SEC letter to the company is the first no-action letter the agency has sent to a cryptocurrency entity. It is considered historic according to Forbes and was the response to an earlier letter sent by the company to SEC on April 2.
The no-action letter from SEC on the TKJ token is an indication that ICO space can be effectively regulated if teams are willing to comply with guidelines.
These follow a set of rules that have been released by the agency to enable stakeholders assess if token they are associated with are deemed investment contracts which makes them securities and therefore subject to the approval of SEC.
The agency is considering hiring legal experts that are specialists on the evolving crypto industry. This would enable them act as advisors for its Division of Trading and Markets.