Blockstack PBC recently announced that its subsidiary, Blockstack Token LLC made a filing with the U.S. Securities and Exchange Commission (SEC) to raise $50 million token offering through the regulatory body’s Regulation A+ Framework.
The company is making efforts to comply with the SEC and approval would mean that the Blockstack could sell its Stacks (STX) tokens. Additionally, a nod from the regulatory body would stand the company’s token out as the first ever SEC- qualified token offering.
Blockstack Token Sale May be New Chapter for Crypto Fundraising
Blockstack PBC, a blockchain computing network headquartered in New York, announced on Thursday, April 11, that its subsidiary, Blockstack Token LLC, filed with the U.S. Securities and Exchange Commission (SEC) to raise $50 million in token sales. According to the company’s blog, the token offering would use SEC’s Regulation A+ framework.
The Regulatory A+ framework, which serves as an alternative to the traditional IPO, is an updated version of the Regulation A. The updated version also offers an exemption for smaller companies that wish to offer and sell securities.
With the Regulatory A+ comes two tiers, Tier 1 and Tier 2, with the former offering $20 million and the latter offering $50 million, both over a 12-month period. Blockstack filed an offering statement with the SEC using Tier 2.
According to the filing submitted on Thursday, the company would offer 295 million Stack Tokens. The breakdown included 215 million tokens for $0.12 each and 40 million tokens for $0.30 each. Blockstack plans to offer the remaining 40 million Stack Tokens for “non-cash consideration” in line with its “App Mining Program” which would be used to develop standard applications on the company’s platform.
With approval from the SEC, Blockstack’s token sale would be the first ever SEC-qualified token offering. The recent move by the company would set the pace for other players in the sector and would usher in regulated tokens.
SEC-Compliant Cryptocurrency Tokens Sale
The release further noted that the company was creating a framework in strict compliance with the SEC guidelines. Speaking further on the matter, Co-founder and CEO of Blockstack PBC, Dr. Muneeb Ali said:
“We’ve been in a confidential submission process with the SEC, making progress as we drive towards an SEC-qualified token offering. Recently, U.S. markets have been closed to crypto projects given regulatory uncertainty, and we believe in opening the U.S. markets to innovation in this area. We’ve been working with securities lawyers to create a legal framework that can enable blockchain protocols to comply with SEC regulations. Our framework is consistent with the latest SEC guidelines released last week.”
Muneeb further stated that the towing the regulatory line was a conscious decision, with the knowledge that would be time-consuming and require plenty of work.
The SEC has constantly referred to most token offerings as “securities”, with the cryptocurrency projects referring to their tokens as “utility” instead. In 2017, SEC Chairman, Jay Clayton stated that tokens and offerings marketed with the aim of getting profit, fall under the U.S. Security Law. In April 2019, the commission released a guidance framework that tried to clearly define the categorization of token offerings.
Ivy League University Buying into Cryptocurrency
The Blockstack filing further revealed that Harvard University is also investing in the company’s million-dollar token offering. The university’s endowment along with two other investors are participating in the company’s token sale.
An excerpt from the filing reads:
“The token advisory board consists of seven members. Three of the members, Charlie Saravia, Zavain Dar, and Rodolfo Gonzalez are designees of affiliates of the Harvard Management Company, Lux Capital and Foundation Capital, respectively, limited partners of the QP Fund which have purchased an aggregate of 95,833,333 Stacks Tokens.”
The remaining four are independent members, which include Koen Langendoen, Arvind Narayanan, Arianna Simpson, and Catherine Tucker. Morgan Creek’s Anthony Pompliano took to his Twitter handle to tweet the university’s involvement.
BREAKING: Harvard’s endowment invested $5M – $10M directly into Blockstack’s token sale.
This means that one of the leading university endowments is comfortable holding tokens directly.
THE VIRUS IS SPREADING ????
— Pomp ???? (@APompliano) April 11, 2019
Back in 2018, another Ivy League School, Yale University, also dabbled into the virtual currency market. The university invested in a digital currency fund called Paradigm, that raised $400 million.
Even with concerns bordering from lack of regulation to money laundering, the involvement of different institutions in the cryptocurrency market shows the continuous expansion of the industry. With the educational sector gradually warming up to virtual currency, adoption is set for an all-time high.