A New Kind of Token Sale Puts You Next to Harvard Endowment
This Thursday marks a new stage for crypto investors as first-of-its-kind digital token offering gives retail investors access to opportunities previously available to investors such as Harvard University only.
This has become possible as the U.S. Securities and Exchange Commission has approved the first-ever digital token offering, to be held by blockchain start-up Blockstack, a developer of a decentralized computing network.
The token sale, which is set to start today (Thursday) at 11:00 AM New York time (15:00 UTC), will be conducted under the SEC’s regulation A+, the company said in a blog post.
According to the SEC’s website, Regulation A+ is “an exemption from registration for public offerings,” allowing companies to raise up to USD 50 million in a 12-month period without a need to “register or qualify their offerings with state securities regulators.”
“We hope that this regulatory framework will democratize access to our network and that other projects may potentially be able to use our legal framework as an example. We believe that this qualification not only benefits the Blockstack ecosystem but can help mature the broader crypto industry,” Muneeb Ali, Co-founder and CEO of Blockstack said in a blog post.
The company said it will conduct a USD 28 million cash offering. Thanks to the SEC’s approval of the sale, even U.S.-based so-called “non-accredited investors” are allowed to participate, something which has become a rarity in the world of initial coin offerings (ICOs) due to stringent regulations in the U.S.
Also, as part of the offering, an additional USD 12 million in tokens will be allocated to Blockstack’s App Mining Program, which rewards the developers who create the top-ranked applications within the Blockstack ecosystem.
Taking this step shows that there is at least one way of legally compliant token funding and distribution methods here in the U.S. There was no doubt a lot of hard work behind the scenes communicating to the SEC on the finer points of a token sale.— Katherine Wu (@katherineykwu) July 10, 2019
Blockstack has already had some success with its decentralized computing network, which can be used by developers to build decentralized alternatives to existing centralized services like messaging platforms, Google Docs, membership platforms like Patreon, and more. So far, 165 applications have been built on Blockstack’s decentralized computing network, according to the CEO.
“The offering provides incentives for developers to contribute to the success of a secure next-generation computing network. These tokens, called Stacks (STX), will be used to register digital assets like domain names, write and enact smart contracts, and process transaction fees on the network,” he added.
Blockstack also made headlines earlier this year when it became known through an SEC filing that Harvard University’s USD 39.2 billion endowment had invested directly in Blockstack’s token sale.
As reported, this is not the first fundraising effort of the company: in November 2017, they raised a total of USD 26.3 million through selling STX, followed by another round in December 2017, which got them USD 21.2 million. The funds are subject to return should Blockstack fail to meet certain milestones, to be tracked by a token advisory board.