The Application of Broker-Dealer and Exchange Regulations to Secondary Markets
"The U.S. Securities and Exchange Commission’s (“SEC” or “Commission”) recent enforcement actions involving AirFox, Paragon, Crypto Asset Management, TokenLot, and EtherDelta’s founder illustrate that market participants must still adhere to well-established and well-functioning federal securities law framework when dealing with technological innovations, regardless of whether the securities are issued in certificated form or using new technologies, such as blockchain.
Broadly speaking, the issues raised in these actions fall into three categories:
- Initial offers and sales of digital asset securities (including those issued in initial coin offerings (“ICOs”))
- Investment vehicles investing in digital asset securities and those who advise others about investing in these securities
- Secondary market trading of digital asset securities.
This article discusses some of the nuances of trading of digital asset securities in the secondary market."