BlockMason is moving full steam ahead with their Initial Coin Offering (ICO) that will apparently be open to US purchasers. BlockMason is developing the Credit Protocol (CP) and associated Credit Protocol Token (CPT). With Credit Protocol, BlockMason says it has taken the “next logical step in the decentralized economy: democratizing the creation of credit.”
With CP, BlockMason says it will be able to permanently record debt and credit obligations between parties “democratizing currency creation.”
BlockMason explains in their White Paper that debt and credit are powerful financial tools and they will be strengthened by the security and flexibility of the Blockchain. An individual need not own ETH in order to draw debt in ETH. BlockMason envisions a future in which debts and credits recorded on the Credit Protocol could exceed the total market capitalization of all cryptocurrencies combined. Their ICO is expected to be launched soon.
Recently, the SEC put their foot down on the wild-west ICO market telling the world enough, was enough. The enforcement division is poised to put the hammer down on issuers that do not file for an exemption on offers that are deemed to be securities. Using the DAO debacle as an example, the SEC cautioned platforms and issuers alike, causing a palpable pause in tokenized offers. In response, some ICOs have said they will not offer their digital coins to US purchasers. Others, like Filecoin on CoinList, opened up to accredited investors only and filed a Form D (506c).
BLockMason states they are poised to launch their CP ICO – minus a filing with the SEC. On a post on Medium, the platform explains:
“…we are ready to do a U.S. securities law-compliant ICO immediately after the SEC report. Based on the wording of the report, and our own extensive legal research, we believe there are only two secure types of ICOs that can operate without fear of exchanges shutting down token trading:
An ICO that goes through a traditional registration process with the SEC.
An ICO that offers product-use tokens, NOT investment tokens.”
In BlockMason’s opinion, any ICO that is not based on a existing product may be a security as it fails the Howey Test. BlockMason believe’s their CP token (or CPTs) is a product-use token of an existing product, and therefore not subject to SEC regulation and not a security. The product they offer is already functional and is “akin to a software license” and thus transferable at a profit. Or perhaps not -as you may give it away for free if you like. Do you have that? BlockMason is drawing a line in the regulatory sand and they are willing to take a bit of a chance and offer their ICO to US purchasers.
“BlockMason is confident that CPT does not constitute a security. And, unlike other blockchain companies, we are willing to stand behind our belief by OFFERING OUR TOKENS FOR SALE IN THE U.S.”
Their legal counsel, Stephen H. Galebach, published a legal opinion stating;
“Under U.S. securities law, there is no reason for BlockMason to deny persons in the United States the opportunity to purchase CP tokens in the BlockMason ICO as proposed in the BlockMason whitepaper of August 14, 2017.”
This is one to watch. I am certain the Feds will be checking it out too.
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