Recently, the decentralized computing network, Blockstack, became the first blockchain startup to be approved by the US Securities and Exchange Commission's Regulation A+ (Reg A+) for compliance token sales, which has attracted wide attention in the industry. On July 15th, in the "Blockstack and Web3.0 era" Hangzhou offline activity AMA, Blockstack ecological development partner Xan Ditkoff answered the questions of the participants about Reg A+.
The third from the left is the Blockstack Ecological Development Partner Xan Ditkoff
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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+. Blockstack spent 10 months and spent $2 million before it was approved by the US Securities and Exchange Commission to become the first project to issue tokens for compliance.
For many people who care about STO (securities tokens), Reg A, Reg D, and Reg S are common ways for STO projects to seek compliance. So why did Blockstack choose Reg A this time? Xan said that in fact, at the end of 2017, Blockstack sold the token to the agency through Reg D. However, the Reg D project can only be directed to certified investors. In order to make the distribution of tokens more decentralized, Blockstack chose Reg A+ this time, allowing retail investors in the US and around the world to participate in token purchases, allowing tokens to be more widely distributed among its potential users.
At the same time, Xan revealed:
“In fact, Blockstack hopes that more ordinary investors will be able to purchase our tokens. To this end, we have delayed the subscription of the institutions and given priority to retail investors.”
According to Munsetb Ali, CEO of Blockstack, the project token STX is a utility token, not a security, since its blockchain was launched. However, Blockstack is still seeking a Reg A+ exemption, which is handled in a way that treats tokens as securities, adding a layer of insurance to compliance. So careful, how is Blockstack considered?
Xan explained that STX is not a security, but in the short term, Blockstack will treat STX as a security , strictly abide by Reg A regulations, and report strictly. However, this is only temporary.
“If Blockstack achieves sufficient decentralization in the future, reporting to the SEC becomes unnecessary, STX will revert to the utility token itself and no longer need to deal with securities. In fact, the regulator is also Very understanding."
The emphasis on compliance is also the most important factor for Blockstack to become the first Reg A+ exempt encryption program. Xan said that from the day the company was born, Blockstack attached great importance to compliance issues and has been actively lobbying to promote the revision of regulatory laws. Xan also revealed that there are actually 40-50 companies applying for Reg A+. But he thinks:
“Although I’m based on Ethereum’s token YouNow, we have received a Reg A+ exemption, but in the short term there will not be a large number of companies exempted by Reg A+, and it may take up to six months for many companies to apply.”
So, where is this very compliant, where should the STX token be traded? Stock exchange, or is it an encrypted exchange?
Xan said that within the United States, STX will strictly comply with Reg A+ regulations and trade on the SEC-approved ATS (Alternative Trading System, a US-matched buyer and buyer that forms a home-based non-exchange trading system). However, for the United States, STX is a utility token. Like other tokens, STX can log into encrypted exchanges that are not open to US users.
The Babbitt reporter found that a few days ago, an exchange (CoinEx) issued an announcement announcing the STX futures. In this regard, Xan said that it is very welcome to buy STX on exchanges around the world, so that more people can get tokens more conveniently.
Blockstack's compliance approach seems to point to a viable path for utility tokens. The ideal is always beautiful, the reality is often cruel, and the Reg A+ road actually does not work. We will wait and see.