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SEC gives green signal to Blockstack's Regulation A+ token offering

Thu, 11 Jul 2019, 08:50 am UTC

The United States Securities and Exchange Commission (SEC) has reportedly given blockchain startup Blockstack a go signal to conduct a $28 million digital token offering under Regulation A+, according to the Wall Street Journal.

As per the report, the first token offering approved by the commission will see Blockstack selling SEC approved tokens on Thursday. But unlike other firms that have previously carried out Regulation A+ offering, this will mark the first time investors will receive a token instead of company shares.

A total of 62 million Blockstack’s tokens, called Stacks, will reportedly be sold at a price of $0.30, whereas 78,333,333 Stacks will be offered at a discounted price of $0.12. The company said that an additional $12 million in tokens will be rewarded to Blockstack developers.

Regulation A+ is an alternative to traditional initial public offering (IPO) designed to cater to startups that need early funding. It has more lenient disclosure policies compared with an IPO, but it only allows companies to raise up to $50 million within a 12-month period.

Meanwhile, founders Muneed Ali and Ryan Shea said the process to obtain approval was long and costly, adding that they had spent $2 million. However, they noted that the SEC had to create a digital token offering protocol under Regulation A+ from scratch.

The news follows after the SEC and the Financial Industry Regulatory Authority (FINRA) recently released a joint statement clarifying the broker-dealer custody of digital asset securities, with focus on key principles for both entities’ approach to broker-dealer regulation, investor protection, and other different factors related to these many questions.

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