SEC gives OK to social media platform to issue stablecoin without registering as a security

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The U.S. Securities and Exchange Commission, or SEC, has issued a rare no-action letter in response to a request from a blockchain-backed platform over the issuance of a digital asset.The SEC letter issued on Nov. 19 says that its Division of Corporation Finance would “not recommend enforcement action” against avatar social platform IMVU issuing its VCOIN digital asset under certain conditions. The commission will allow the firm to offer the token without registering it as a security.Crypto firms issuing their own tokens often have to abide by the SEC’s regulatory framework, which has proved contentious. The classification of a “security” is for assets dependent on the work of a third party to gain profit. To abide by the no-action letter, IMVU needs to keep its new stablecoin from looking like an investment opportunity, which, for example, Facebook got tripped up doing with its Libra stablecoin. As part of the terms of the staff recommendation letter, the SEC said IMVU would still be subject to Know Your Customer and Anti-Money Laundering regulations in addition having “specified limits” on VCOIN purchases, conversions, and transfers. The letter stated IMVU would need to make the token “continuously available in unlimited quantities …

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