The Securities and Exchange Commission (“the Commission”) has noted the rise in popularity and prominence of cryptocurrency and related digital assets. These products/assets are numerous with their ever broadening form spanning from the famous Bitcoin, alternative coins, Initial Coin Offerings (“ICOs”) to other products/assets that are emanating from block-chain technology. Their market has grown rapidly with more and more people opting to use or invest in them.
The question running through most people’s minds is whether these products/assets are financial securities? The answer to this question largely depends on the characteristics and use of the particular product/asset under consideration. Some of the above mentioned products/assets, for example ICOs seem to possess features of financial securities. This is not to say that these products/assets are indeed financial securities but that they possess similar attributes. Whether any digital assets/products fit the description of a financial security in accordance with the Securities Act No. 41 of 2016 (“the Act”) will be assessed on a case by case basis focusing primarily on each asset/product’s characteristics, features and uses as indicated above.