North American Securities Administrators Association ("NASAA") President Joseph P. Borg warned individuals and firms involved with initial coin offerings ("ICOs") and cryptocurrency-related investments to be mindful of federal, state and provincial securities requirements, such as product registration under the securities laws.
As previously covered, the NASAA, in conjunction with other industry groups in the United States and Canada, is actively monitoring ICO and cryptocurrency-related investigations. Although some of these investigations are focused on alleged securities fraud, Mr. Borg reported that regulators are finding many other potential legal violations. In particular, Mr. Borg cautioned that if the products fall with the definition of "securities," they are subject to a potential securities law registration requirement. Mr. Borg further urged investors to determine whether any ICO or cryptocurrency-related product they are considering purchasing has been registered under the securities laws or qualified for an exemption from registration.
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