The Division of Corporation Finance of the US Securities and Exchange Commission (SEC) issued on Wednesday a no-action letter in which it allowed IMVU, Inc., a social media company, to sell an Ethereum-based token without the need to register it as a security.
In particular, the SEC wrote:
"Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel that VCOIN is not a security, IMVU offers and sells VCOIN, which is transferable both on and off of IMVU’s platform, without registration under Section 5 of the Securities Act and does not register VCOIN as a class of equity securities under Section 12(g) of the Exchange Act. Capitalized terms have the same meanings as defined in your letter."
Thus, the regulator will allow the company to sell a stablecoin without the need to register it as a security. However, in order to enjoy this prerogative, the company must avoid making its new stablecoin look like an investment opportunity, a mistake that Facebook made with its stablecoin Libra and that resulted in the fierce opposition of regulators.
In addition, IMVU must comply with customer verification (KYC) and anti-money laundering (AML) regulations and have "specified limits" on VCOIN purchases, conversions and transfers.
Subscribe to our Telegram channel to stay up to date on the latest crypto and blockchain news.