SEC Issues First 'No-Action' Letter Clearing ICO to Sell Tokens in US

The U.S. Securities and Exchange Commission has issued a "No-action" letter to TurnKey Jet, Inc., agreeing that tokens used by the business-travel startup are not securities.

The regulatory stamp of approval is contingent upon the company using its tokens under certain conditions.

TurnKey Jet will not represent the tokens as having profit potential.

The SEC's letter says, "TKJ will restrict transfers of Tokens to TKJ Wallets only, and not to wallets external to the Platform."

"Redeemable for air charter services, the proposed Tokens in operation will be like the business jet card programs that are common in the aviation industry today."

TurnKey further asserts that these tokens will not obligate the company to provide service at any cost; rather, one TKJ will represent one USD worth of fees.

All outstanding tokens will be fully backed by an equal amount of fiat in an FDIC-insured institution, the company writes.

The TurnKey letter notes that only the company will be able to generate tokens and that the sale will be on an ongoing basis.

Tokens will be nonrefundable and destroyed as users spend them - and escrowed USD will be remitted to the company or its business partners.

While the SEC's letter forbid the tokens from leaving wallets controlled by TurnKey Jet, it did not object to this statement within its letter to the agency: "When a Token enters circulation, TKJ Consumers may freely trade or exchange the Tokens in their possession between any other Consumer, Broker or Carrier within the Network."