Digital Chamber of Commerce Weighs In on Telegram Legal Battle With SEC

The Chamber of Digital Commerce has filed an amicus brief in the ongoing court case between encrypted messenger service Telegram and the United States Securities Exchange Commission.

In the amicus brief - a legal document that allows a non-litigant to submit its expertise or opinion in a case - the Chamber makes a number of arguments regarding how the U.S. District Court for the Southern District of New York should consider digital assets.

The Chamber is a non-profit trade association established in 2014 which aims to promote the adoption of digital assets and blockchain-based technology.

Given its supportive stance on blockchain technology, the Chamber emphasized that it is not trying to prove whether Telegram's $1.7 billion Gram token sale was a securities transaction.

"Although the Chamber does not have a view on whether the offer and sale of Grams is a securities transaction, the Chamber has an interest in ensuring that the legal framework applied to digital assets underlying an investment contract is clear and consistent."

The Chamber has urged the Court to distinguish the term of digital asset, which is the subject of an investment contract, from the securities transaction associated with it.

The Chamber says that not all digital assets should be regulated as securities.

"We further respectfully request that the Court affirm that a digital asset is not a security solely by virtue of being in digital form or recorded in a blockchain database."

It noted that, while digital asset investors should be afforded full protections of securities laws, disclosures required by the securities laws "Serve little purpose with respect to commercial transactions in the digital assets themselves."

"Depending on the relevant activity, other regulatory regimes exist to protect purchasers or counterparties. For example, fraud and market manipulation in certain digital asset transactions is subject to CFTC enforcement authority. Other activities involving digital assets may also be subject to the Bank Secrecy Act, federal and state consumer protection laws, state money transmitter licensing laws, and state laws specific to virtual currency transactions, such as New York's Virtual Currency Business Activity law."