Blockstack has recently become the first blockchain start-up company approved by the US Securities and Exchange Commission's Regulation A+ (Reg A+) to raise funds through the sale of tokens, which has caused widespread concern in the industry. However, some insiders believe that the approval of the US Securities and Exchange Commission Reg A + is not suitable for blockchain and encryption companies, and the CEO of Blockstack also claims that their tokens are not securities. what on earth is it? Why is there a different voice in the industry for such a thing that seems to be good for the encryption industry? Let's take a look at the Planet Jun and everyone.
What is Reg A+?
According to the US Federal Securities Act, there are only two ways to comply with the issuance or sale of securities: first, to register as a securities product at the US Securities and Exchange Commission level (subject to strict audit requirements); and second, to meet the current four regulations for exemption, They are Regulation D, Regulation S, Regulation CF, and Regulation A+. Regulation A+ is an exemption and is a revision of the original Regulation A.
- Howe Test: SEC hangs the sword of Damocles on the head of the encryption company
- 40 crypto-securities companies are blocked in applying for licenses in the US. What is behind the delay in FINRA?
- The pace of supervision is close: India has drafted a currency violation, and the US exchange has taken the initiative to remove the token.
- Babbitt Column | Deng Jianpeng: The Future of Blockchain Supervision
- Research Report | 2019 Global Digital Currency Trends and Latest Regulatory Policies
- Depth | Panorama of Global Digital Currency Regulatory License
On March 25, 2015, the US Securities and Exchange Commission extended Regulation A to two levels under Section 401 of the Jumpstart Our Business Startups Act:
The first tier provides up to $20 million in securities issuance in 12 months;
The second layer provides up to $50 million in securities issuance in 12 months.
Buyers of Tier 2 products must be certified investors and their issuers must be qualified by the US Securities and Exchange Commission, but do not need to register or qualify their products with state securities agencies, but will be subject to state enforcement and Constraints on anti-fraud rules.
According to information disclosed by Blockstack, they will raise $28 million in proceeds from token sales after receiving the Regulation A+ exemption, which means that they are part of the second level of regulation. Companies under the Regulation A+ are able to conduct initial public offerings (IPOs) with fewer regulatory barriers, so they are a bit like “lite IPOs”, and startups don't have to face the strict disclosure and accounting standards of traditional IPOs.
Reg A+ is suitable for established companies, but not for encryption startups
However, in the opinion of industry experts, although Blockstack's approval by the US Securities and Exchange Commission is indeed a milestone and also provides experience for other encryption companies, this does not mean that other encryption startups should follow suit to apply for the Regulation A+ exemption.
Darren Marble, CEO of encryption company Issuance and Regulation A+ expert, said that Blockstack's approval by the US Securities and Exchange Commission may not clear the way for other encryption companies to use this "fast track", he said:
“I think Reg A+ is very suitable for established companies, but not for start-ups. In general, most blockchain and cryptocurrency startups are pre-products or pre-revenues. ""
Darren Marble believes that Reg A+ is ideal for companies with physical products (such as cars), but blockchain startups like Blockstack may not be suitable because blockchain companies do not offer consumer products related to ordinary investors. And Blockstack can't provide products that most people understand, as do other companies in the encryption industry. He added:
“In companies that raise funds from retail investors under the Reg A+ regulatory framework, encryption companies are probably the worst type of company.”
Even so, for the first “entitled” Blockstack in the encryption industry, this aura can benefit from it, because they have found a new path from the securities-based ICO competition. But as Darren Marble said, regulators may still reject a large number of emerging encryption companies that apply for Reg A+ exemptions and attempt to provide token sales:
“You need a marketing partner, the legal total black currency, and you need to do a lot of paperwork relative to Reg D, which will also extinguish most of the enthusiasm of companies trying to enter the encryption industry by applying Reg A+ exemptions.”
In fact, Blockstack has raised more than $47 million in funding through Reg D, which does not require US Securities and Exchange Commission approval and is limited to certified investors. In contrast, Reg A+ stipulates that fundraising objects can only be opened to investors approved by the US Securities and Exchange Commission.
Reg A+ may have a negative impact on some companies
Companies looking for Reg A+ need to be vigilant – with LongFin as an example, they have cast a long shadow on the regulatory path, the cryptocurrency company has been in Nasdaq before being sued by the US Securities and Exchange Commission G used this framework for an IPO, but as the US Securities and Exchange Commission sued and frozen the company's $27 million in illegal earnings, its stock price fell sharply, and eventually had to reluctantly “voluntarily” withdrew from Nasdaq.
After the “LongFin Incident”, Nasdaq attempted to raise its own standards for the listing of Reg A+ companies, and proposed changes to the US Securities and Exchange Commission. The new rules were approved by the regulatory authorities at the end of June this year. Companies are required to be listed for at least two years after obtaining Reg A+ approval.
TokenSoft CEO Mason Borda said that Blockstack's move may open the door for other encryption companies, he said:
“Any time the SEC will develop a new regulatory path, the issuer will use it as a template to achieve the same goal, and we expect similar demand to increase significantly.”
In fact, as Mason Borda expected, the next day after Blockstack announced its approval by the US Securities and Exchange Commission, another cryptocurrency company, YouNow, did the same thing. They also registered themselves under Reg A+. Ethereum token Props.
Blockstack indicates that its product is not a security
Surprisingly, Blockstack does not consider their token "Stack" to be a security. If so, why are they getting approval for token sales at the US Securities and Exchange Commission?
According to Munsetb Ali, CEO of Blockstack, Stack has been a practical token since its blockchain went live, and there is an application for the token. They sought Reg A+ approval from the US Securities and Exchange Commission because their tokens were treated as securities in certain jurisdictions. Muneeb Ali said that Blockstack will be very cautious in the United States and will abide by the rules of securities-based tokens, but it is certain that Stack tokens do not represent Blockstack's equity and will not pay dividends to holders.
If, as Muneeb Ali said, Stack tokens may have some problems, such as whether they will be regulated in the future to allow trading on open trading platforms like Coinbase or Binance. But Muneeb Ali believes that the main responsibility in this case is actually on the exchange. Stack tokens were originally designed to be traded on P2P exchanges, but in the US, these exchanges must be registered as “stock exchanges” in accordance with regulatory requirements in order to trade the relevant tokens, which also means limiting Stack tokens in Huobi and Binance. The exchange trades.
This article comes from theblockcrypto , the original author: Aislinn Keely & Frank Chaparro
Odaily Planet Daily Translator | Moni