The author examines the decisions in SEC v. Telegram and how they may impact digital token issuers’ use of the Simple Agreement for Future Tokens model for distributing tokens.

The Southern District of New York has issued two main rulings in SEC v. Telegram—that the offer and sale of Telegram’s cryptocurrency (Grams) involved a "scheme" to distribute securities subject to 1933 Act registration requirements, and that the Court’s preliminary injunction regarding sales or resales of Grams applies to both U.S. and non-U.S. purchasers. Murphy & McGonigle’s Larry Bergmann examines both rulings and weighs the impact they might have on future issuances of digital tokens. Among other things, Bergmann believes that the decisions will make it more difficult for digital token issuers to argue that securities sold to raise capital can be transformed at a later date into "utility" digital assets that are not securities. He also raises the question of whether improvements can be made to an operational cryptocurrency platform to enhance the value of that platform’s tokens.

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The agency is seeking public comment on two proposals that will promote the responsible and efficient diversification of cryptocurrencies traded on New York licensed exchanges.

The staff of the Division of Corporation Finance issued the second no-action letter permitting an unregistered token offering and sale for use on a functional platform.