Blockstack Receives SEC Approval for First Reg A+ Compliant Token Offering in U.S. History

News and Analysis

The United States Securities and Exchange Commission (SEC) has approved a $28 million Reg A+ offering for decentralized Internet company Blockstack. According to the company’s blog post, this is the first time in U.S. history that a crypto token offering has received SEC qualification and “a huge step forward for decentralized applications, internet security, and privacy.”

Blockstack’s plans to conduct the industry’s first SEC-qualified offering were first announced in April.

Under the SEC Regulation A+ framework, Blockstack will conduct a $28 million cash offering. The token offering will open on Thursday, July 11th at 11:00 am Eastern Daylight Time. It will be open to any purchaser who would like to take part in the Blockstack next-generation computing network, subject to a small number of geographical restrictions.

“This means everyone from general enthusiasts, to longstanding Blockstack supporters, to accredited or non-accredited investors alike — in the U.S. and globally, can participate in the sale,” says the company.

As part of the offering, an additional $12 million in tokens will be allocated to Blockstack’s App Mining Program, which rewards the developers who create the top-ranked applications within the Blockstack ecosystem.

“It is a truly groundbreaking day for decentralized technology and, by extension, fundamental digital rights. By building technology that “can’t be evil” by design; trusting centralized organizations to make the right choice is replaced by mathematical proofs.”

The Reg A+ platform lets companies raise up to $50 million from retail investors as opposed to only from accredited investors. Thus far the Reg A+ uptake has been limited even considering the reduced documentation required by the SEC. Connecting a token with a Reg A+ funding round could turn these into truly cryptocurrency-based equity investment vehicles, although Blockstack is selling utility tokens this time around.

Notably, Blockstack founders Muneeb Ali and Ryan Shea told WSJ reporter Paul Vigna that they spent $2 million to get approval for the sale.

“Mr. Ali said it took so long and cost so much because the company and the SEC had to start from scratch to create a protocol for a digital-token offering under Reg A+,” he wrote.

Blockstack has already raised $5 million from VC and another $47 million in a 2017 token sale.

According to the company, the upcoming token offering will fuel further growth of the Blockstack decentralized computing network and provide incentives for developers to contribute to the success of a secure next-generation computing network. These tokens, called Stacks (STX), will be used to register digital assets like domain names, write and enact smart contracts, and process transaction fees on the network.

The Blockstack network already supports more than 165 applications characterized by a user-first mentality and #CantBeEvil architecture. Examples include decentralized services like Dmail, a secure, encrypted email solution with no corporate intermediaries; BitPatron, a censorship-resistant membership platform; and Graphite Docs, a decentralized document management service protecting freedom of speech and privacy for jeopardized groups, like reporters.

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