The U.S. Securities and Exchange Commission (SEC) 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.
Those conditions include: token-generated funds cannot be used to develop the company’s platform technology (such as its app), the tokens will be immediately useful, the TKJ tokens will remain at a fixed price of one U.S. dollar, the tokens can only be used for air charter services, repurchases will only be made at a discount to the token and TurnKey Jet will not represent the tokens as having profit potential.
TurnKey Jet is an air charter and air taxi service based in the United States, operating from West Palm Beach, Florida, since 2012.
The letter, dated April 3, comes in reply to a letter from James P. Curry, counsel for TurnKey Jet, dated April 2. 2019. The letter was signed by Jonathan A. Ingram of the SEC’s Division of Corporate Finance.
Perhaps the most interesting provision requires that the tokens not be transferable. The SEC’s letter says, “TKJ will restrict transfers of Tokens to TKJ Wallets only, and not to wallets external to the Platform.”
A person familiar with the news told CoinDesk, “Many in the industry have asked how the commission might give some relief in a case where folks are trying to bring this technology into a real-life use case and the no-action letter simply says the division will not recommend an enforcement action.”
This is a developing story and CoinDesk will update as needed.
Additional reporting by Nikhilesh De.
SEC image via Shutterstock