As has been discussed in recent months, the war between regulators and the pro-cryptocurrency community seems to be at the beginning stages of a real challenge as regulators in the United States are now beginning to take formidable steps towards restricting risky actions based on the activities of cryptocurrency businesses and investors.
According to a recent piece published at Forbes, “The U.S. Securities and Exchange Commission has issued its first ever letter assuring investors in a startup using crypto-tokens similar to bitcoin to raise capital that it will not take an enforcement action against the company, and in a separate document explained the rationale behind the decision for future companies.”
The company which received the “No Action” letter was a crypto-based startup Turnkey Jets, however there is a point of confusion with this situation; Turnkey Jets is a luxury plane and staffing service for private jet liners, and only had mentioned the possibility of a blockchain powered coin in certain marketing materials without any real white paper or declared plan of action. The issue is that the Securities and Exchange commission wants to prevent Turnkey Jets from using any venture capital or investor money from any type of token based trading options.
The article from Forbes continues to state that “The No Action Letter includes six key points related to TurnKey Jets. Notably, the company has promised not to use any funds from token sales to develop its platform, network and applications, each of which will be fully developed and operational when the tokens are sold. Also, the tokens will be immediately usable to purchase air charter services when they are sold.”
The issue of ICO’s (Initial Coin Offerings) has been a target of the Commission as well as the IRS and numerous other consumer protection agencies and departments. The fear among regulators is the nerve racking history of crypto and/or blockchain start ups scamming consumers and initial investors to buy a large amount of these coins with the premise that they could be stumbling upon the next Bitcoin, for example. These regulations are in place to ensure that the cryptocurrency isn’t being used as a form of luring in venture capital without offering any formal declaration of what the coins/tokens that Turnkey Jet intends to use the coins for.
This action follows several other announcements domestically and internationally, such as Colorado signing a bill restricting the actions upon the state government towards cryptocurrencies, and the United Kingdom looking to clamp down on cryptocurrency traders and innovators as a whole.