Name
Global FinTech Guide
Country _ Name
United States
SectionTitle
ICO/token sale
Body
Companies and projects have increasingly relied on the sale of digital assets, or tokens, as a means of fundraising. These tokens generally do not grant the holders an ownership interest in the issuing company or project, but may provide governance rights, access rights or other utility. This has been conducted through public sales known as initial coin offerings (ICOs), proliferation through token generation events (TGEs) or private sales, among other mechanisms.  While showing characteristics of traditional methods of fundraising, there are a range of unanswered questions related to the legal classifications of such products. As ICOs and TGEs will usually be distributed online and internationally, there is usually no single legal framework applying to such transaction, and the legal framework of each market in which the tokens may be offered or sold needs to be considered.

Introduction

Attitude of the country towards ICOs/token sales

In the United States, regulators including the SEC have largely classified token sales as securities offerings that must either be registered with the SEC or conducted under an exemption. While numerous enforcement actions regarding unregistered token sales were brought through the end of 2024, in 2025 the SEC closed most investigations and enforcement actions that did not also include a fraud component. While the Howey test to determine whether an asset qualifies as an investment contract remains the law of the land, the SEC has shifted to an interpretation that is more friendly to the crypto industry. The Howey test assesses whether there is an investment of money in a common enterprise with an expectation of profits derived from the efforts of others. it is not yet clear which tokens may or may not be securities, and state law interpretations may differ from those of the SEC, the SEC has clarified that the following types of tokens and token transactions are not securities, as long as certain conditions are met: memecoins; covered stablecoins; liquid staking tokens; staking-as-a-service; and decentralized physical infrastructure network (DePIN) issuances. Further, in certain instances, the courts have determined that a direct offering and secondary sale of the same token may be a securities transaction in one instance but not the other.



Legal affairs

Presence of any explicit regulation on ICOs and the issuance of token/coins

In the United States, there are no federal laws specifically tailored to regulate ICOs or the issuance of tokens. The regulation of a digital asset depends on its classification as either a security, a commodity, or another type of asset that may not be explicitly regulated. U.S. regulators have attempted to fit ICOs and token sales into pre-existing legal frameworks designed for physical assets or traditional securities. This approach has proven challenging due to the constraints of securities laws, making it nearly impossible for token sales to comply fully with these regulations. While Congress is attempting to address this with a market structure bill, no legislation has passed as of this time.



Presence of any explicit restrictions on ICOs or the issuance, distribution and/or transfer of token/coins
While there are no explicit federal restrictions specifically targeting ICOs or token sales, the SEC and many state regulators have historically considered ICOs to be securities offerings, particularly when the tokens are used for capital raising purposes. Resales of tokens have sometimes been found to be securities transactions, and there have been lawsuits and enforcement actions accusing token exchanges of being unregistered exchanges, broker-dealers, and clearing agencies. While the SEC is now taking a more skeptical view of when a token transaction may be a securities transaction, the law remains in flux and without formal guidance.

A handful of alternative trading systems support the offering and trading of tokens that clearly are securities, such as tokenized stocks or revenue sharing arrangements.




Obligations and requirements to issue token/coins

The obligations and requirements for issuing tokens depend largely on which regulators might claim jurisdiction over those tokens. If a token is considered a security, it must offer and sell the token pursuant to a registration statement or an exemption from registration. For tokens that are not classified as securities, the offer and sale may require state licensure. Offerings of derivatives of commodities may require registration with the CFTC, and the CFTC also has antifraud authority over sales of short and long positions in tokens that are classified as commodities.



Classification of token/coins in the jurisdiction

Unlike some other countries, the United States does not have formal classifications of tokens such as securities tokens, digital payment tokens or utility tokens. Rather, regulators have utilized common law tests established decades ago, before digital assets even existed, to make a case-by-case fact-based determination as to whether a token is classified as a security, a commodity or anything else. The most commonly applicable of these tests is from the Supreme Court “Howey” case, wherein the court found a sale of a security where an orange grove was being sold with a promise to pick and sell the oranges. Under the test more generally, there may be a security if there is an investment of money into a 'common enterprise' with an expectation of profits from the efforts of others. In the case of financial instruments that resemble debt, the “Reves. v. Ernst & Young” case uses a 'family resemblance' test to determine whether



Presence of a duty to publish a prospectus bevor offering token/coins to investors

A prospectus would only be required in the case of an offering registered or required to be registered under the Securities Act or, in limited circumstances, qualified as an offering circular under Regulation A+. These are very rare in the U.S.

Even when a formal prospectus is not legally mandated, it is considered good practice to provide investors with legally reviewed risk disclosures, as there may be a private right of action for material misstatements and omissions.



Presence of AML/KYC requirements that are needed to be fulfilled regarding (i) the initial issuance of token/coins and (ii) any following transfer of token/coins to third parties
There are no formal AML or KYC requirements specifically mandated for the initial issuance of tokens or for their subsequent transfer to third parties. However, most tokens traded in the United States are listed on exchanges that are licensed as banks or MSBs, which are subject to stringent AML/KYC regulations. These exchanges must comply with these requirements to prevent financial crime and ensure proper identification of their users. Furthermore, there can be strict liability for money laundering or violating sanctions or anti-terrorism laws, making it good practice for even unlicensed digital asset participants to perform basic KYC.



Additional comments regarding (i) the legal situation for ICOs/token/coins and (ii) any following transfer of token/coins to third parties

The legal landscape for ICOs and token issuance in the United States remains challenging due to the absence of clear regulatory classifications for tokens. While the SEC has exchanges, many lawsuits remain under state law or in private rights of action. Even without this regulatory uncertainty, it is extremely uncommon for an ICO or TGE to be performed within the U.S. because that likely would be subject to income tax (and possibly sales tax). Fixing this regulatory uncertainty is a current priority of Congress and the administration .



Economic conditions

Market size for ICOs/token sales and existence of any previous regulated ICO/token sales in the jurisdiction

In recent years, very few, if any, ICOs have been regulated within the United States. Most ICOs and token sales originating in the U.S. have been conducted through private placements, relying on exemptions from registration and filing under securities laws. Alternatively, tokens relating to U.S. projects frequently are issued by offshore foundations in transactions designed to stay entirely outside the U.S . Consequently, there is little detailed market data in the U.S.



Additional comments regarding the economic situation for ICOs/token sales or what companies must be aware of in this business area

As discussed above, the regulatory environment for ICOs and token sales in the United States is marked by significant Companies must be cautious as merely conducting sales from outside the U.S. may not be sufficient to avoid scrutiny, particularly if there are U.S. investors or members of the issuing team are based in the United States. This regulatory uncertainty and the potential for enforcement actions and private actions create substantial legal and financial risks.




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