On March 7, 2018, the Divisions of Enforcement and Trading and Markets of the Securities and Exchange Commission released a “Statement on Potentially Unlawful Online Platforms for Trading Digital Assets.”

The Statement noted that: “Online trading platforms have become a popular way investors can buy and sell digital assets, including coins and tokens offered and sold in so-called Initial Coin Offerings ….”  The Statement then strongly warned that: “A number of these platforms provide a mechanism for trading assets that meet the definition of a “security” under the federal securities laws. If a platform offers trading of digital assets that are securities and operates as an “exchange,” as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.” On this basis, the Statement set out a list of some questions investors should ask before they decide to trade digital assets on an online trading platform.