The U.S. Securities and Exchange Commission's Division of Corporation Finance issued a no-action letter on Wednesday to a social media company that wants to sell an in-house, Ethereum-based token.
The letter, dated November 19, is addressed to IMVU, Inc., which offers an array of social-focused virtual worlds. It notes;
"Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel that VCOIN is not a security, IMVU offers and sells VCOIN, which is transferable both on and off of IMVU’s platform, without registration under Section 5 of the Securities Act and does not register VCOIN as a class of equity securities under Section 12(g) of the Exchange Act. Capitalized terms have the same meanings as defined in your letter."
In a letter to the SEC dated November 17, IMVU representatives from Perkins Coie wrote that the firm "believes that utilizing blockchain technology, and the Ethereum blockchain specifically, as the foundation for the Upgrade, will address the limitations of the Credit system and create new opportunities for Platform growth."
Specifically, it said that the social media company's token — dubbed VCOIN — "will enable Users to purchase or earn and use a digital asset that—unlike Credits—has real value and can be transacted both on and off the Platform."
The SEC first issued a no-action letter in the Ethereum context in 2019, when it gave the green light to a proposed sale by gaming startup