Whether you are creating the next big competitor to Bitcoin or raising money for your favorite charity, digital currency is here to stay as a consistent part of our daily lives. Creating a digital currency can be complicated however both technically and legally. While an attorney likely won’t be able to help you create a digital currency, they can definitely help with registering your currency with the proper agency.
Who do you register with?
The U.S. Government treats digital currency like a security, such as stocks and bonds, and therefore, the agency responsible for regulating digital currency is the Securities and Exchange Commission, better known as the SEC. The SEC doesn’t have direct powers to control digital currency markets, however, they wish to know exactly what companies out there are offering it and how much they are selling it for. This is because there are different levels of disclosure required for different sale amounts. For instance, if you are selling more than ten million in digital currency, you need to meet larger disclosures. In the future, it is likely that the SEC will have more powers to regulate the digital currency market so it is best to keep up with the news or consult regularly with your Attorney.
What do I file?
With your initial filing, it is likely that you will be filling a Form-D, which is essentially an introduction of your company to the SEC along with information concerning the digital currency transactions you are engaging in, specifically how much you are planning to sell per year and for what value you are selling it for. The SEC also wants to make sure that you are determining whether or not the buyers of your digital currency at this stage are not barred from the Bad Actor rule, a rule that says people who have previously engaged in securities fraud cannot purchase and trade stock.
When do I file?
Typically, a Form-D is filed after the first digital currency transaction, however, before filing, you need to ensure which exemption you are actually filing under. There are three total and each one has specific requirements. That is why it is helpful to have an attorney review your company before the first transaction to ensure your sale procedure conforms to the most favorable exception.