First US-regulated token sale raises $23 million

Blockstack worked with the Securities and Exchange Commission on a legal framework for security token offerings

Blockchain outfit Blockstack has raised $23 million in a Securities and Exchange Commission-approved token sale, the first time an ICO has been approved by the regulator.

In June, the Commission granted the decentralised app platform permission to sell its tokens under Regulation A+ — an exemption that allows smaller companies to raise up to $50 million from the public and not just accredited investors. Compared to traditional IPOs, Regulation A+ offerings have lenient disclosure requirements.

The absence of SEC regulation is a major factor behind the phenomenal growth of highly-speculative cryptocurrency markets. But the regulatory-free environment has enabled fraudulent blockchain startups to scam the public with slick marketing campaigns promising high returns on the sale of tokens or coins.

Blockstack, a platform that allows developers to build privacy-protecting decentralised applications, said it worked with the SEC on a legal framework for security token offerings (STOs) and that the approval process cost $2 million. The company had previously raised $52 million from accredited investors and venture capital.

“One of our goals for working with regulators in the United States was to open up our network to a broader audience. We wanted to reach more retail investors who can be users of the Blockstack network,” the company said in a press release.

“For the first time, retail investors in the United States were able to participate in a token offering qualified by the SEC. More than 4,500 individuals and entities participated in the 2019 token offerings.”

Blockstack said it is in discussions with Asian investors for additional funding of at least $5 million to grow its business in Asia.

“We are in discussions with international investors for an additional $5M+ which may be distributed in a separate private placement or in a follow-on SEC-qualified offering, as we have previously disclosed in our SEC filings,” it said.