The SEC issued a second no-objection letter, and the company’s tokens do not need to be registered as securities.

The US Securities and Exchange Commission (SEC) sent a no-objection letter to the Pocketful of quarter (PoQ). Pocketful of quarter is a game startup that issues tokens on the Ethereum blockchain.

The SEC corporate finance department stated in a no-objection letter to the plan to sell the company that PoQ can legally sell quarterly tokens to consumers without registering the Quarters token as a security. (In April of this year, the SEC issued a no-objection letter to the business travel startup TurnKey Jet , which was also the first similar letter.)

Token

Based on the ERC-20 standard, Quarters is the first of its kind to be approved by US regulators.

In yesterday's letter, Jonathan Ingram, chief legal counsel of the SEC FinHub department, wrote:

"FinHub does not recommend enforcement actions based on the fact that, as your method consultants say, Quarters are not securities, PoQ offers and sells Quarters does not require registration under Chapter 5 of the Securities Act, and Quarters does not have to be based on the Trading Act No. 12 ( g) Chapter is registered as equity securities."

Lewis Cohen of DLX Law, a partner of PoQ, said:

"It is worth noting that this is the first (approved sale) ERC-20 public chain token."

PoQ CEO George Weiksner said the token is a stable currency and the price of the Quarters is set by PoQ. This is the company's performance in complying with SEC regulations. (Smart contracts prevent tokens from being sent to unapproved accounts, thereby limiting secondary market transactions.)

PoQ also raises funds through the issuance of registered securities issued by the investment token, which will be independent of the release of Quarters.

Weiksner explained that this dual token system is to ensure that users use Quarters to trade, rather than holding the token and hope to get a return.

He said he hopes that Quarters will improve the gaming experience for those who are tired of spending a lot of resources on different platforms, adding:

"This can make the game better."

Michael Weiksner, head of the company (also George's father) said:

“The most important thing for teenage boys is to play video games. This crypto currency wallet may be the first financial product they have.”

Michael Weiksner said that PoQ is working with Apple and Google to sell Quarters tokens in both app stores.

Quarters token issuance conditions

This no-objection letter requires PoQ to comply with a number of commitments, including ensuring that players cannot buy or sell or trade tokens. Instead, only the developer or "influential person" account can trade with the player.

Michael Weiksner said:

“In addition to licensed developers, players can't buy or sell tokens to others, and that's the key to our…(compliance) strategy.”

"Everyone's account number is the same, but it will be restricted, so transactions cannot be made. The default account number is restricted, and only approved accounts can accept Quarters."

He said that at present, only PoQ can review accounts, and there is no specific plan to grant other entities the same power. PoQ is still studying whether this is feasible.

Developers and influential people must pass KYC and AML processes to get their account approved.

The no-objection letter states that Pocketful of Quarters has completed the development of the platform and can be put into use before token sales.

In addition, when the coin sales began, the Quarters token “will be used immediately for the intended use of the PoQ gaming platform” and “only the group with the licensed account can transfer their Quarters to the Quarters Smart Contract at a pre-determined exchange rate. Exchange to Ethereum."

Finally, the SEC's Ingram added that "any different fact or condition could lead to different conclusions from the SEC."

“In addition, this response only indicates the position of the FinHub department on the implementation of the action, and does not make any legal conclusions on the issues raised or any other laws, including the Bank Secrecy Act and the applicability of the anti-money laundering and related frameworks. ""

Michael Weiksner said that it took PoQ and DLX almost a year to get to this point.

Cohen said:

“For a long time, we have been emphasizing the importance of working with regulators, not confrontation… This is the first ERC-20 token that can be sold without registration as a security. I think this is a very important point. ""

“It takes a lot of patience, which means that not every ERC-20 token is a securities issue, and this is a positive thing in working with regulators.”