The US Securities and Exchange Commission on Tuesday declared that offers and sales of digital assets by “virtual” organisations — sometimes known as initial coin offerings, or ICOs, or token sales — could be deemed securities and subject to federal regulation.

The regulator’s report stems from an inquiry it launched in response to a sale of tokens by The DAO, a decentralised autonomous organisation that use distributed ledger or blockchain technology to operate.

The tokens, according to the SEC, represented interests in its enterprises and were sold to investors in exchange for a kind of virtual currency known as “Ether”. Investors received certain voting and ownership rights along with their tokens, which they could also sell on certain secondary platforms.