Blockstack has become the first token issuer to have a Reg A+ offering qualified by the Securities and Exchange Commission (SEC). The event may break open a longstanding logjam of digital asset filings which have been in limbo at the SEC.
In a blog post, Muneeb Ali, co-founder Blockstack and CEO of Blockstack PBC, stated:
“We are honored to announce that Blockstack PBC’s upcoming token offering has been qualified by the SEC under Regulation A+. This is the first time in U.S. history that a crypto token offering has received SEC qualification. We believe this is a huge step forward for decentralized applications, internet security, and privacy.”
In the past couple of days, Blockstack had refined the Offering Circular submitted to the SEC with the final version posting this week.
Issuers may raise up to $50 million under Reg A+. Additionally, issuers may raise capital from both accredited and non-accredited investors. Most token issuers have been using Reg D in the past – a securities exemption that is available only to accredited investors. Another unique aspect of Reg A+ is the fact the digital asset may become immediately tradable.
It has been widely expected for some time that Blockstack would become the first digital asset Reg A+ issuer. The fact the company is using CoinList to issue the token and PrimeTrust to provide custody were certainly positive factors in the eyes of the SEC.
Ali said they decided to work directly with the regulators to figure out a legal framework for the token offering. Ali explained that they wanted to make the digital asset available to the general public and not exclude US investors – currently a common occurrence.
“We believe that this was the harder but better path to take. 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,” said Ali.
Blockstack said it will conduct a $28 million cash offering beginning Thursday, July 11th at 11:00 am ET. As part of the offering, an additional $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.
Another interesting aspect of the offering is the fact that the token is being issued as a security but the company would like to see the token morph into a utility – something the SEC has indicated it is comfortable with – contingent upon the characteristics of the digital asset.
The additional capital raised by the offering will provide the funds to power the Blockstack decentralized computing network.
There are also incentives for developers to contribute to the success of a secure next-generation computing network. The Stacks tokens (STX), will be used to register digital assets.
Investors are able to register now to participate in the offering. The sale is on a first-come, first-serve basis, as measured by receipt of payment. Larger investors ($200k and up) should contact Blockstack directly.
It will be interesting to see which companies, and how soon, follow in the footsteps of Blockstack and leverage Reg A+ to launch a digital asset offering.
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