The Securities and Exchange Commission’s Division of Corporation Finance Wednesday issued its first “no-action” letter informing a would-be ICO producer that it did not consider its tokens securities and would not recommend enforcement action against it for proceeding with the sale.
The action comes hours after the SEC released long-promised guidance to ICO issuers detailing how to avoid having their tokens classified as securities, which causes severe restrictions on how they can be sold.
Turnkey Jet is seeking to issue stablecoins valued at $1 to be used solely for purchasing services of its short-term rental private aircraft. The company offers private jet charters and air taxi services, and is in the process of purchasing its third aircraft.
The company’s lawyer, James Curry, described the tokens as “smart contracts” between the holder and the company redeemable for air charter services, and likened them to the business jet stored-value card services common in the industry. It added that by using blockchain technology it would ease the record-keeping required by regulatory authorities, prevent chargebacks, and speed the rental process. The tokens will be created on an ongoing, as-needed basis. They are transferable within the TKJ network to allow the participation of brokers.
Among the reasons cited by the SEC FinHub’s chief legal advisor, Jonathan Ingram, in reaching the decision are that the TKJ network will be fully built and operational before the ICO; that the TKJ coins will be usable immediately; that they will be held only in TKJ wallets; and that they will be marketed solely as a means of purchasing TKJ services rather than as an investment.
In addition, the SEC letter cited the promise by TKJ to only repurchase TKJ coins at a discount unless ordered otherwise by a U.S. court.