Blockstack To Hold A Regulation A+ Token Sale Worth $50 Million With SEC’s Crowdfunding Exemption
Blockstack To Hold Regulation A+ Token sale
For Blockchain-related businesses to move forward, they need avenues to grow funds. From 2016 to around late 2018, Initial Coin Offerings were the default way by which most Blockchain and crypto businesses set about raising their funds.
However, this method had its downsides as ICO laws weren’t always very clear. On top of this, many unregulated and downright fraudulent ones found their way into the market. As a result, ICOs were frequently shut down by the Securities and Exchange Commission and were banned in countries such as South Korea. Since then, ICOs have fallen out of favor and are being replaced with other means of fundraising.
One method that has recently made the news is Regulation A+ token sales after Blockstack announced that they would be making use of such a sale to raise $50 million.
A New Way To Raise Funds
The Regulation A+ crowdfunding exemption was first introduced in 2012 under the JOBS act and gives two tiers via which equity crowdfunding campaigns may raise funds through US investors. The two tiers are of $20 million and $50 million, the latter of which Blockstack is opting for. To initiate a Regulation A+ crowdfund, the company in question will have to file an offering statement with the SEC.
Blockstack formally filed theirs with the SEC on April 11, 2019, and plan to raise their funds through a subsidiary called Blockstack Token LLC and sell a token called Blockstack Stacks (STX). A total of 295 million STX will be issued and each will go for $0.30.
“The net proceeds of the offering will be used to accelerate the development of its decentralized computing stack and app ecosystem,” the press release said, in line with Blockstack’s goal of creating a truly decentralized Internet.
The management of the company, has, in the past, expressed disapproval at the idea of raising funds through private investors due to a lack of diversity. In December 2018, the company was able to raise over $50 million through a token sale that saw investors such as Union Square Ventures, Foundation Capital, Winklevoss Capital, and Blockchain Capital, among others. Overall 440 million tokens were sold and around 800 individuals participated.
This new fundraising method also hopes to shed light on alternative ways for other firms in the blockchain space.
“We’ve been working with securities lawyers to create a legal framework that can enable blockchain protocols to comply with SEC regulations,” said Muneeb Ali, co-founder and CEO of Blockstack, “This can potentially set a precedent for others in the industry, not just for public offerings, but also as a path to launch new public blockchains and establish a path to bootstrapping decentralized ecosystems.”