IPO and ICO under USA law and rights

Endy Callahan

USA law actively regulates the issuance of shares and tokens. Learn about the rules of their placement and taxation of cryptocurrencies. Information about the current legislation will help to avoid problems with the fiscal authorities.

In July 2017, the United States Exchange and Securities Commission equated ICO to IPO. Its representatives warned traders and investors: the USA legislation on securities transactions will be used for all crypto assets that are put up for sale. It applies to decentralized organizations and ordinary companies. The rules are the same no matter the asset: dollars or cryptocurrency. Article "What is ICO?" provides more information about the initial coin offering.

What does the SEC's decision mean in practice 

In fact, now in the eyes of USA law, the initial offering of tokens is regulated by the same legislative acts as the initial offering of shares. Since the SEC's decision, companies that issue cryptocurrency assets are required to register transactions. Violation of this requirement will be punished in accordance with applicable law. Crypto-exchanges are also required to register with the exchange and securities Commission.

The SEC made a decision regarding the ICO after checking the legality of transactions with the DAO cryptocurrency project. When it was launched, investments in the amount of millions of dollars were attracted, in Ethereum. DAO acts as an analogue of the venture fund; it attracts investments for project funding in the area of digital coins. Control is carried out by a computer application. The code contains all information about corporate work, operations performed, salary payment schedule, management, etc.

The regulator has not yet taken any measures to the DAO, but it warned all market participants. The changes are aimed at protecting traders and investors. The article "Regulation of cryptocurrency in the United States" contains references to legislative acts that determine the work of digital money in the country.

Tax regulation ICO

The USA internal Revenue service (IRS) deals with taxation issues in America. According to the 2014 guidelines, cryptocurrency is proprietary. Transactions with it, including mining, are subject to taxation.

The administration sets

  • Salaries that are paid in cryptographic currency are subject to payroll tax and Federal income tax.
  • The nature of losses or profits from the exchange or sale of coins depends on whether the cryptocurrency is the main asset of the payer.
  • Payments for the services of the counterparty under the signed contract in cryptographic currency are subject to taxation.
  • Information on payments in digital currency should be sent to the appropriate authorities. If a USA citizen receives income in coins, he must necessarily declare them in dollars.

USA law actively regulates IPO and ICO. Such actions are aimed at protecting investors and exchanges. Before registering an initial token offering, it is important to familiarize yourself with the legal regulations and follow them accurately. Otherwise, you will have to pay a lot of fines. Our portal has prepared a number of articles on the regulation of cryptocurrencies in Europe and Asia. Information from them can be useful when choosing a country for business registration.