Let Us Know How We Can Help You.
What is SEC compliance filing?
Public companies, certain insiders, broker-dealers, and some private companies with over 500 common shareholders and $10 million in assets are required to file regulatory documents to the Securities and Exchange Commission (SEC). By filing these documents, it provides transparency of information to investors, analysts, and regulators. Investors rely on these SEC filings for evaluation of companies for investment purposes. The SEC has ruled most cryptocurrencies are not securities because they are decentralized. This throws a wrench in what needs to be reported to the SEC as there is a lot of legal gray area and the SEC laws and regulations are changing daily. Blake Harris Law can help navigate these intricacies to ensure you or your company’s digital assets are in compliance.
Why do I need legal guidance on SEC compliance filing?
If you own part of a public company, are an insider, are a broker-dealer, or a private company with over 500 common shareholders and $10 million in assets, you will be required to file with the SEC. Depending on your type of business, filings can include the following:
It is essential these documents are accurate and prepared by an experienced financial advisor or accountant and legal counsel as these filings will be available to the public. The SEC filings are available for the public via the EDGAR system so that the public can access this information and make decisions on when to buy, sell, or hold a company’s securities.
Should a person or company fail to comply with SEC filings or violate the federal securities laws by misrepresenting important investment information, manipulating the market prices of securities, stealing customers’ funds or securities, insider trading, or selling unregistered securities, they can be subject to an SEC investigation. If found in violation, then the violation can result in consequences such as monetary penalties, injunctions, and restrictions on the ability to work in the securities industry, just to name a few. With a solid legal team to support you and your company, you can address these consequences legally.
SEC Compliance Filing and Cryptocurrency
Currently, cryptocurrency is not considered a security because it is decentralized, meaning cryptocurrency is not regulated by an entity such as the U.S. government. And therefore, companies dealing in cryptocurrency have not had to file with the SEC. However, as of April 2021, Coinbase Global Inc, one of the U.S.’s largest cryptocurrency exchanges gained approval by the SEC to list its share on the Nasdaq. This is a considered a victory in the crypto world and for crypto investors as it gives crypto as a currency and source of value more legitimacy.
Coinbase is unlikely to be the last exchange to go public. And, as you continue to invest in exchanges, blockchain technologies, and cryptocurrencies, it’s in your best interest to pay attention and seek legal counsel as the crypto landscape evolves and new regulations are established. At Blake Harris Law, we are on watch for critical compliance and policy changes in regard to crypto assets and can help you navigate what is legally required as these regulations change.
SEC Compliance Filing and ICOs
An Initial Coin Offering (ICO) is the way funds are raised for new blockchain based startup cryptocurrency offerings. ICOs are different from cryptocurrency as it is the process to raise funds for a new token (the cryptocurrency itself) rather than actually being a cryptocurrency. This means, your ICO may be considered a security offering and it may need to be registered with the SEC. For more information on filing your ICO with the SEC, visit our Initial Coin Offering page.
Cryptocurrency investment is a risky and volatile space for investors. Since crypto investments are considered to have high volatility, many investors are steering clear of it but we’re seeing a recent shift with a high interest in investing in crypto ETFs. Crypto ETFs are similar to any other ETF. While an ETF is a combination of securities (e.g., mutual funds, bonds, stocks) and are traded on an exchange, a crypto ETF tracks one or more digital tokens, is traded like a stock, and subject to price changes as investors buy and sell through the day on a traditional exchange (e.g., Nasdaq, NYSE). This all means that if for example an investor wants to get some skin in the game and invest in Bitcoin but doesn’t want to invest directly on a cryptocurrency exchange, that investor could invest in a crypto ETF where they could track the value of Bitcoin on a market exchange like Nasdaq, NYSE, and TSX. As of May 2021, the SEC has not accepted crypto ETF proposals but there are many benefits investors could take advantage of should the SEC start accepting crypto ETFs.
The benefits of a crypto ETF include:
Any ETF, including crypto ETFs (if they are accepted by the SEC), that is listed on traditional exchanges are subject to SEC filing regulations. As of May 2021, some of the more popular Blockchain ETFs include Amplify Transformational Data Sharing ETF (BLOK) and Innovative Share NextGen Protocol ETF (KOIN) listed on the NYSE Arca, Reality Shares Nasdaq NexGen Economy ETF (BLCN) and First Trust Indxx Innovative Transaction & Process ETF (LEGR) listed on the Nasdaq, have seen positive gains, which is hopeful for investors tracking the crypto space. In Canada the crypto ETF, Purpose Bitcoin ETF (BTTC) was listed on the Toronto Stock Exchange (TSX), which could also help crypto ETFs garner favor with the SEC.
As of May 2021, investors are keeping close watch on whether or not a Bitcoin ETF could be accepted by the SEC. Thus far the SEC has rejected any submissions for Bitcoin ETFs but as we’ve seen the adoption of BTTC on the TSX and heavy hitter investment companies like Fidelity and Goldman Sachs proposing the approval of Bitcoin ETFs, this could persuade the SEC to change its stance.
The crypto landscape and crypto investment opportunities are changing day-to-day. As the SEC continues to dive deeper into the digital currency space, regulations will continue to change. At Blake Harris Law we keep abreast of these changes and can support you and your investments to stay compliant as the changing SEC security laws and regulations on digital currencies and investments.