Blockstack Aims To Raise $50 Million Via SEC’s Regulation A+ Framework
Decentralized computing network Blockstack has applied to the U.S. Securities and Exchanges Commission (SEC) to launch a $50 million token sale which — if approved — would be the industry’s first SEC-qualified offering.
New York-based company, which aims to build a decentralized internet infrastructure, plans to use the revenue from the token sale to improve its ecosystem.
Under U.S laws, the SEC’s Regulation A+ exemption which was introduced in 2012 allows approved firms to conduct equity crowdfunding by issuing two-tier securities to investors in the US. Such offerings will exist for 12 months and could target either $20 million or $50 million capital.
After rounds of private comments, we’ve publicly filed for a $50M token offering with the SEC.
Upon qualification, our network and the Stacks tokens will be available to retail investors, including the US. https://t.co/OuPVbA4eJt
— Muneeb Ali (@muneeb) April 11, 2019
The intended sale would enable Blockstack to raise capital through the U.S. securities markets via a subsidiary, Blockstack Token LLC, which would sell a token called Blockstack Stacks (STX) in a securities offering designed to be more flexible than an IPO. In total, 295 million STX tokens will be offered.
According to the filing, different allocations of a total of 295 million million STX tokens would be sold at between $0.12 to $0.30 apiece, according to specific terms, as well as via Blockstack’s so-dubbed App Mining program. The latter involves the conferral of tokens in exchange for the development of applications that run on Blockstack’s decentralized application (DApp) network.
“The net proceeds of the offering will be used to accelerate the development of its decentralized computing stack and app ecosystem,” the company said in a blog post.
Blockstack CEO Muneeb Ali went on to describe the regulatory certainty as a primary reason behind turning to the Reg A+ tokenized offering:
“Recently, U.S. markets have been closed to crypto projects given regulatory uncertainty, and we believe in opening the U.S. market 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 guidance released last week.”
He also believes the offering will be a first of its kind, setting a blueprint for others to follow.
“Upon qualification, we believe that this offering may be the first time a blockchain project receives approval to access the public U.S. securities markets. 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.”
Established by two Princeton students in 2013, Blockstack was conceived as a decentralized network to challenge the centralized system of the internet.
In 2017, Blockstack had a successful SEC Regulation D funding round, raising $52 million from investors such as Union Square Ventures, Winklevoss Capital, Blockchain Capital, Digital Currency Group, Y Combinator, Lux Capital, and Naval Ravikant. Today, more than 80 applications exist on Blockstack, including Graphite, a decentralized Google Docs alternative, Sigle, and BitPatron.
The core technology of Blockstack is open-source and contains a community of more than 7,000 individuals.
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