A Securities and Exchange Official official last week said it was possible that some tokens sold in initial coin offerings might not be considered securities, Bitcoin Magazine reports. His comments suggest that the agency, which has been seeking to label virtual tokens distributed in ICOs as securities, might have some flexibility on the issue.
William Hinman, the director of the SEC’s Division of Corporate Finance, delivered testimony in a congressional hearing on Thursday. Rep. Tom Emmer of Minnesota, who is a proponent of cryptocurrency, asked Hinman whether it was possible that a utility token would not be a security because it is not issued to raise capital.
Hinman said that was possible, because utility tokens don’t have the “hallmarks” of securities. He also said that many fundraisers are aimed at building networks where a token is designed solely to be a buying mechanism.
“We can certainly imagine a token where the holder is buying a token for its utility, not as an investment,” Hinman was quoted saying. “Especially if it’s a decentralized network where it’s used, and not central actors where there would be information asymmetries where they would know more than token investors.” Read more here.