As of July 10th 2019, Blockstack has received approval from the Securities and Exchange Commission (SEC) to launch a Reg A+ tokenized offering. The approval marks a first in U.S. history, and under the Reg A+ exemption, the offering will be open to the general public.
Blockstack’s Reg A+ Tokenized Offering Explained
Back in April, Blockstack made headlines by filing an offering statement with the U.S. SEC to conduct a Reg A+ tokenized offering.
Now, that filing has been approved, resulting in “the first time in U.S. history that a crypto token offering has received SEC qualification”.
Reg A+ is an alternative to the Initial Public Offering (IPO) designed to make funding more feasible for early stage startups. It became available in 2012 through the Jumpstart Our Business Startups (JOBS) Act.
The Reg A+ features two different tiers, allowing companies to raise up to either $20 million or $50 million in a 12-month period with numerous securities exemptions.
Following the approval, Blockstack will conduct a $28 million cash offering which will open on July 11th.
Given the securities exemptions provided via Reg A+, the tokenized offering will be available to the general public— including non-accredited investors in the U.S.— with only a small number of geographical restrictions.
The tokens will be abbreviated as STX.
The SEC and Regulated Digital Assets Explained
Given the SEC’s current stance on the regulation of digital assets, an increasing number of companies are turning to the Security Token Offering (STO) as a viable means to raise capital.
SEC Chairman Jay Clayton has stated on numerous occasions that the majority of Initial Coin Offerings (ICOs) he has seen, constitute securities offerings. They therefore must abide by the SEC’s current laws or receive an exemption, since he “is not going to change rules just to fit a technology”.
The result has been the rise of the STO, which aim to incorporate the SEC’s existing rules and regulations. While ICOs currently raise 58 times less than they did a little more than one year ago, STOs saw a 130% increase in Q1 2019.
To date, the security token industry has raised nearly $1 billion dollars, with expectations for greater implementation has the space develops.
What do you think of Blockstack receiving SEC approval to launch a Reg A+ tokenized offering? Let us know what you think in the comments section below.
Image courtesy of Blockstack.