Blockstack, the first token issuer to have a Form 1-A approved by the Securities and Exchange Commission (SEC) has raised $23 million in their offering which included funds raised under Reg S for international investors. The final tally was revealed by Blockstack in a blog post. Blockstack used the Reg A+ exemption to issue tokens they preferred not to label as securities although by using the exemption it was hard to argue otherwise. Back in July, securities attorney Doug Ellenoff told Crowdfund Insider:
“…until there is some court or legislative clarification, we should just move on and accept that tokens used in the first instance to raise funds for entrepreneurial endeavors are securities.”
Under Reg A+, an issuer may raise up to $50 million from both accredited and non-accredited investors. Uniquely, after a Reg A+ offering is closed the assets may trade on an exchange – an important characteristic to create liquidity for holders.
Blockstack worked closed with the SEC to have its Reg A+ offering “qualified” thus kicking off the first digital asset offering for an exemption that has been viewed by the token sector as a prime vehicle to raise capital in a regulatory compliant offering.
Blockstack that for the first time retail investors had been able to participate in a token offering. In the past, most issuers utilized the popular Reg D exemption which is available only to accredited investors. Blockstack reported that over 4500 individuals and entities participated in the offering – including a Reg S offering for investors outside the US. Blockstack pointed to the fact that Reg A+ investors were able to participate at the same price as an earlier Reg D round.
Institutional investors included Union Square Ventures, Lux Capital, Recruit Holdings, Arrington Capital, Hashkey Group, Fenbushi Capital, Frontier Ventures, Spartan Group, and other funds, according to Blockstack. The company also reported “strategic investors” from Asia.
“We announced earlier that Hashkey and SNZ led our Asia strategic round. Recruit, one of the largest internet companies in Japan, partnered for the Japanese market. And we are in discussions with international investors for an additional $5M+ which may be distributed in a separate private placement or in a follow-on SEC-qualified offering, as we have previously disclosed in our SEC filings. The goal of this additional distribution is to continue growing our community and network in Asia,” reported the company.
The company said they will start distributing Stacks Tokens (STX) to developers who are building dApps on the network. Reportedly already over 250 have already been built in the past 6 months.
Blockstack is expected to use the funds to fuel platform growth and boost its computing network.
In the end, it will be the execution of Blockstack’s stated business vision that will determine whether or not the offering is a true success – regardless of whether or not the asset is a digital token.
Tokens expect to be traded on non-US exchanges as soon as next month.
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