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New York City Virtual Token Lawyers for Compliance with State Blue Sky Laws

In the United States, securities are regulated both by the federal government and state governments. State securities laws are commonly known as “blue sky laws.”

Before virtual-token developers launch a token generation event (i.e., an initial coin offering or ICO), they must ensure that their ICO will not violate either federal securities law or any state’s blue sky law.

Dilendorf & Khurdayan is a New York City law firm that helps blockchain startups, entrepreneurs, and developers finance their businesses through ICOs in a way that complies with state and federal law.

Our attorneys work quickly and diligently to provide our clients with a comprehensive overview of the regulatory landscape into which they are launching.


Advised clients on the application of state securities laws, including requirements for registration, necessary filings and available exemptions

Performed detailed token analysis, including state securities law and the application of risk capital test

Advised clients on the difference between utility and security tokens under the current regulatory framework in the U.S., including state laws

Providing ongoing updates to clients regarding the latest regulatory developments, including relevant releases by the Securities and Exchange Commission (SEC) in connection with regulating existing and new cryptocurrencies and ICOs

Blue Sky Laws May Use Broader Tests for Securities Than Federal Law

States do not always define securities in the same way that federal law does. Many states use a definition that captures more types of investments than would the federal definition.

For example, more than a dozen states use some version of California’s “risk capital” test to define securities, which considers whether:

  • Funds are being raised for a business venture or enterprise;
  • The transaction is offered indiscriminately to the public at large;
  • Investors are substantially powerless to affect the success of the enterprise; and
  • The investors’ money is substantially at risk because it is inadequately secured.

As part of our token-analysis services, we provide a rigorous review of how states’ blue sky laws will impact our clients’ ICOs, helping to ensure compliance with the law on a nationwide and state-by-state basis.

For a consultation about State Blue Sky Laws

please contact Dilendorf & Khurdayan by sending an email or calling us at 212.457.9797.