- The U.S. SEC has approved blockchain startup Blockstack to publicly issue its tokens
- The decision is widely claimed as a game-changer for the crypto industry
- Several other startups are looking to go this route
On July 10, 2019, the Wall Street Journal reported that the U.S. Securities and Exchange Commission (SEC) had given the greenlight to blockchain startup Blockstack to go ahead with its $28 million public token offering under Regulation A+.
SEC Gives a Nod to Token Sale
In what is widely being hailed as a historic decision by the U.S. SEC, the regulatory watchdog has approved Blockstack, a distributed ledger technology (DLT) startup to go ahead with its scheduled public token offering under official regulations.
Per the report, the startup will launch its token offering on July 11, 2019, and for the first time in the history, people will see a company issue tokens rather than shares under the Regulation A+ of the U.S. SEC.
For the uninitiated, SEC’s Regulation A+ is an initial public offering alternative which aims to aid startups that are in need of early funding. The regulation was introduced sometime in 2012 via the “Jumpstart Our Business Startups Act,” the report reads. According to the WSJ, any member of the public can choose to participate in a Regulation A+ funding round.
One of the distinct features of Regulation A+ compared to an IPO is that it consists of two hard caps on the amount of funds raised – maxing out at $50 million within a 12-month period.
Crypto optimists have welcomed the decision with many believing that public funding under Regulation A+ could be the new norm for crypto and blockchain-based startups to raise money as the once euphoric initial coin offering (ICO) market largely seems to have fizzled out. Citing research from TokenData, the WSJ report claims that ICO funding crashed from $6.9 billion in Q1 2018 to about $118 million in Q1 2019.
Muneeb Ali, the co-founder of Blockstack, said that the firm spent nearly $2 million and ten months to get the due approvals from the regulatory watchdog. He added that Blockstack had to “develop a protocol for running what is essentially a regulated ICO through Regulation A+ from the ground up.”
As previously reported by Blockchain Reporter, Blockstack had first floated the idea of issuing tokens under Regulation A+ in April 2019.