Blockstack has been given the green light from the Securities Exchange Commission (SEC) in America to proceed with its Initial Coin Offerings (ICOs) under the Reg A+ regulations.Reg A+ is as an alternative to an Initial Public Offering (IPOs), allowing businesses that have a shorter trading history a way to raise capital, with fewer disclosure requirements than a typical IPO. . Many of these mini-IPOs have not performed well and some have been dogged by concerns over fraud, prompting both Nasdaq and the New York Stock Exchange (NSE) to raise their listing requirements for Reg A+ companies.
However, Blockstack is being heralded as the first approval from the SEC since it started it’s “crack down” on Cryptocurrencies, in particular ICOs, as many of the ICOs were perceived as being securities by the regulator. This is significant as it sets a precedent for other firms that wish to raise capital in the USA using Reg A+ regulations i.e. obtaining investments from unaccredited investors — the general public. Blockstack has used the SEC approval, and in doing so, has raised $28 million via the sale of its digital token. Approval from the SEC did not come without a significant cost for Blockstack, as it spent $2 million to get approvalfor its ICO.
Blockstack’s achievement to gain permission from the SEC could prove to be an inflection point for Cryptocurrencies, but investors will still need to be vigilant However, are we now going to see others firms using this route to raise capital and get listed on Nasdaq or the NSE, as opposed to the various new Digital Asset exchanges currently being established?