The Security Exchange Commission (SEC) recently issued a “No-Action” letter, its first in the blockchain and digital asset industry, stating the tokens used and sold by TurnKey Jet, Inc. (TKJ), a travel company startup, are not securities, thus allowing the business to sell its tokens to the public under very specific conditions without registration under the Securities Act and the Exchange Act.  

These conditions, as stated in the SEC letter, are:  

• TKJ will not use any funds from Token sales to develop the TKJ Platform, Network, or App, and each of these will be fully developed and operational at the time any Tokens are sold;   
• the Tokens will be immediately usable for their intended functionality (purchasing air charter services) at the time they are sold;   
• TKJ will restrict transfers of Tokens to TKJ Wallets only, and not to wallets external to the Platform;   
• TKJ will sell Tokens at a price of one USD per Token throughout the life of the Program, and each Token will represent a TKJ obligation to supply air charter services at a value of one USD per Token;   
• If TKJ offers to repurchase Tokens, it will only do so at a discount to the face value of the Tokens (one USD per Token) that the holder seeks to resell to TKJ, unless a court within the United States orders TKJ to liquidate the Tokens; and   
• The Token is marketed in a manner that emphasizes the functionality of the Token, and not the potential for the increase in the market value of the Token. 

“While this is a good path forward for this industry, it does not necessarily mean all token sales or ICOs will receive the same treatment or designation from the SEC,” said BPM Partner Mark Li. “More needs to be done before this industry becomes a part of everyday life, so we encourage clients and companies who deal in digital assets, including tokens, to consult with experienced advisors.”