Quick Appeals/No Action/Conversion process needed after unilateral declaration of Securities status from the Commission, instead of only refunds+sanctions possibility

[1blockologist]

This is inadequate and needs amendment:

within ninety days following a written notification from the Commission to such per-son that such digital unit has been determined by the Commission to be a security, posts public notice of such notification and takes reasonable efforts to cease all sales and return all proceeds from any sales of such digital unit, excluding funds reasonably spent on the development of technology associated with the digital unit.’’.

[1blockologist]

In other jurisdictions, like Liechtenstein, the Financial Market Authority (FMA) allow for "No Action" letters to exempt an entire asset from regulation of the FMA. These are quick and easy to obtain (LI is also a smaller market), and the regulatory will work with an issuer holistically to help create a project in compliance with an understanding of the goal of being regulated by them as a security, commodity, or not being regulated by them. The Regulatory will help achieve any of those outcomes with consumer and investor protection in mind.

In the US, the SEC does not use No Action Letters for this purpose. It uses No Action Letters to help clarify more nuanced aspects of a securities transaction to allow an action between various parties to work. No Action Letters are also time consuming to obtain, with no guarantee the issue will be addressed holistically at all.

It would be more competitive in the US if there was a way to modify a project to maintain compliance, unilaterally from the issuers who know which aspect of the project/transaction made the Commission view it as a security, or with the help or input of the regulators. The path towards a statutory No Action Letter could help, with the lack of a statutory timely response by the Commission generating an automatic No Action Letter. As it stands now, to clarify that something simply isn't a security, multiple No Action Letters on different issues would likely be needed for multiple parties.

Also, securities designation or the inability to get a No Action letter shouldn't be viewed as punishment. It should be viewed through the lens of practicality. If an issuer and all consumers did not expect it to be a security, this modifies their accounting, trading style, and the protections around everyone's speech. The 73rd Congress created the SEC to provide investor protection and confidence in the markets, the current available remedies and administration do not achieve this and only accomplishes the opposite whether the SEC acts or not. This law should address these issues.

[1blockologist]

helps solve issue #3