The Blockchain Association filed an amicus brief today in a lawsuit that the Securities and Exchange Commission (SEC) has brought against Telegram in a federal court in New York.
The Blockchain Association’s brief opposes the SEC’s effort to block the launch of Telegram’s network. The SEC sued in October 2019 seeking to stop Telegram from delivering its tokens, Grams, to early investors. Telegram voluntarily delayed its launch until after the court decides this motion.
The court’s ruling could be among the first to decide the important question of whether and when the U.S. government may treat a digital asset as a security. The lack of clear rules governing digital assets threatens to stifle innovation and push investment overseas. The brief explains that purchase agreements like Telegram’s are designed specifically to comply with the letter and spirit of the SEC’s existing securities rules. These agreements are limited to accredited investors, who would receive tokens only after a blockchain network is functional.
The court’s hearing on the parties’ legal positions and evidence is scheduled for February 18, 2020. The court has not indicated when to expect a ruling.
The Blockchain Association’s brief is available here.