SEC Approves First Public Token Offering Under Reg A+

Wilfred Michael 

Wilfred Michael

News reporter

11 July 2019,
09:08
SEC Approves First Public Token Offering Under Reg A+

The United States Securities and Exchanges Commission (SEC) has according to a WSJ report approved an earlier application submitted by a blockchain-based startup, Blockstack to conduct a public token offering.

As Stmarket.co explained following the filling in April, Blockstack plans to raise at $20-$50 million through the sale of Stacks (STX) token, a utility token for its blockchain and has now received regulatory approval to do so.

The startup uses the Reg A+ framework introduced by the SEC in 2012, thus allowing them to sell tokens to the general public as opposed to just accredited investors in the case of Initial Public Offerings and fundraising efforts under Reg D.

As per yesterday’s report by WSJ, Blockstack would commence the token sales today, July 11 via a website belonging to its subsidiary, Blockstack Token LLC. The startup could raise as much as $28 million, the threshold approved by the SEC for the landmark offering.

A New Precedent?

For nearly two years, a common challenge for crypto and blockchain startups in the U.S has always been how to conduct public token offerings without attracting the ire of the SEC.

The SEC believes that nearly all public token offerings involving cryptocurrencies are securities transactions and thus must be made subject to rigorous rules, with only a few cases qualifying an exemption.

Since then, however, there has arguably been no exemption made by the regulatory body. Instead, we only have a record of several enforcement actions against non-compliant projects with the latest of them being against Canadian messaging platform, Kik Interactive.

Now, that the SEC has approved Blockstack’s token offering, the process used by the startup could leave a mark for crypto and blockchain projects who wish to reach regulatory compliance for their future token sales.

 

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