Blockchain startups have received a dose of clarity on the fundraising landscape, and you can feel the excitement in the air. The U.S. securities regulator has given Blockstack the green light to sell Stacks (STX) tokens in the maiden SEC-approved crypto deal of its kind. The utility token sale will happen via an offshoot of an IPO known as Regulation A+, which was created several years ago. Blockstack is targeting a $28 million token sale that will be open to the public.
It has the potential to be a game-changer for other crypto startups that are looking to sell tokens but not equity in their companies while remaining SEC-compliant. Regulation A+ is meant for smaller companies that don’t want to go through the intrusive process of an IPO, though gaining SEC approval was no walk in the park for Blockstack, which according to the Journal poured $2 million and months on end into the process.
HERE WE GO!@blockstack was just approved by the SEC to hold the first regulated token offering under Reg A+.
Finally non-accredited investors can participate in investments that previously were only open to the rich.
The laws need to change, but this is next best thing 🙏🏽
— Pomp 🌪 (@APompliano) July 10, 2019
Blockstack a Trailblazer
Blockstack, which describes itself as a “decentralized computing network,” is blazing a new trail for blockchain startups. Rather than just ban U.S. investors from its token sale, which it could have done, it spent the time with regulators to get approved. The SEC has largely behaved like The Grinch in the crypto world, and this gives investors and entrepreneurs alike a ray of hope for the future of the space. You have to think companies like Kik are kicking themselves right about now given the court fight they have ahead with the SEC for an unregulated token sale.
Taking this step shows that there is at least one way of legally compliant token funding and distribution methods here in the U.S. There was no doubt a lot of hard work behind the scenes communicating to the SEC on the finer points of a token sale.
— Katherine Wu (@katherineykwu) July 10, 2019
ICOs were all the rage in 2017 but have lost much of their appeal since they became the target of an SEC crackdown. Initial coin offerings weren’t completely wiped out but nearly as other structures like IEOs facilitated by the likes of Binance and STOs trumpeted by the likes of Patrick Byrne take shape. According to WSJ data, ICOs attracted less than $120 million to their coffers in Q1 2019 vs. nearly $7 billion in the year-ago period.
BREAKING: Blockstack received SEC qualification; first-ever SEC-qualified token offering in US history. https://t.co/IbbodLCLgS
— Muneeb Ali (@muneeb) July 10, 2019
Basically, Anyone and Everyone Can Invest
According to the Blockstack announcement, the deal is open to almost everybody.
“This means everyone from general enthusiasts, to longstanding Blockstack supporters, to accredited or non-accredited investors alike — in the U.S. and globally, can participate in the sale.”
Congratulatory notes came pouring into Blockstack across Crypto Twitter, including from Coinbase’s former COO Asiff Hirji, who tweeted:
“Congrats. Good to see your efforts coming through.”
For investors who are interested, Blockstack’s token sale will launch on July 11.