Quote from: moustafab on January 23, 2018, 03:06:38 AM

Hello,

I am a token holder but recently started to worry about the SEC and regulations for tokens that are considered a security.

Dragonchain was sold in the US and considers itself to not be a security, but the SEC will be coming with regulations soon and im afraid they may disagree with this. Has this been thought out by the owners? What happens then? For more details on the SECs latest statement related this, see below. Not trying to spread fear on this but genuinely want to understand since I own the token.

"Second are ICOs where the lawyers appear to have taken a step back from the key issues including whether the "coin" is a security and whether the offering qualifies for an exemption from registration even in circumstances where registration would likely be warranted. These lawyers appear to provide the "it depends" equivocal advice, rather than counseling their clients that the product they are promoting likely is a security. Their clients then proceed with the ICO without complying with the securities laws because those clients are willing to take the risk.

With respect to these two scenarios, I have instructed the SEC staff to be on high alert for approaches to ICOs that may be contrary to the spirit of our securities laws and the professional obligations of the U.S. securities bar.

I recognize that in some ICOs there is no market professional involved. The SEC is undertaking significant efforts to educate the public that unregistered securities investments offered by unregistered promoters, with no securities lawyers or accountants on the scene, are, in a word, dangerous."

Yes, the regulations have been thought about by the team, and they have sought legal counsel in order to make sure they are exempt from registering as a security.

DRGN is a tokenized micro-licence which allows access to the Dragonchain platform. It offers no dividend or revenue for holding the token, and it was clearly stated in the whitepaper that you should not view the tokens as a speculative investment or expect profits from purchasing them. The SEC's regulations are the reason the team will not solicit exchanges to list DRGN, as this could be classed as a form of market manipulation.

The ICO's that have come under the SEC's scrutiny so far have been those which have led investors to believe they can expect profits by purchasing coins or tokens, either by promising a reward or dividend for holding them, such as the DAO, Munchee, and Plexcoin, or by claiming they are backed by some form of commodity, such as real estate and diamonds in the case of REcoin and DRC World.
https://www.sec.gov/litigation/investreport/34-81207.pdf
https://www.sec.gov/news/press-release/2017-227
https://www.sec.gov/news/press-release/2017-219
https://www.sec.gov/news/press-release/2017-185-0

The SEC also stated recently that it is possible for some ICO's to be exempt from regulation: https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11#_ftn5

"It is possible to conduct an ICO without triggering the SECs registration requirements. For example, just as with a Regulation D exempt offering to raise capital for the manufacturing of a physical product, an initial coin offering that is a security can be structured so that it qualifies for an applicable exemption from the registration requirements."

To be clear, I'm not offering you legal or investment advice, and if you're concerned about any risks involved in holding DRGN you should consult your lawyer.