Initial coin offerings are a fund-raising tool for
Until late July, the market for such tokens had flourished outside the scope of SEC regulation but, on July 28, the Commission published a report on the Decentralised Autonomous Organisation (DAO), which argued that the tokens sold in its April 2016 ICO were securities and, as such, should have been registered with the SEC.
The SEC report established conclusively that the DAO tokens were securities using a set of criteria called the Howey test. The Howey test states that if an investment contract involves the exchange of money with the expectation of profit based on the managerial efforts of others, then it is deemed to be a security and must be registered with the SEC.
While the SEC has yet to clarify the situation further, securities lawyers say not all
The SEC report has not slowed down the flow of ICOs. There are 57 ICOs in progress and 62 scheduled to begin in the next month, according to Coinschedule.com.
Solo SEC offer
Of these, only Filecoin has elected to adopt a conservative regulatory approach, marketing itself exclusively to accredited investors (those earning $200,000 or more, or with a net worth of more than $1m).
The platform is unusual in that it allows investors to demonstrate that they are accredited, and will allow start-ups to restrict their investor base to accredited investors — opening the way for other SEC-compliant offerings.
Coinlist is developing a “Simple Agreement for Future Tokens” that will be used for
But it's not all marketing for the listing platform itself. Filecoin also has a tangible purpose — not always the case for a market which many have described as a bubble.
It is aiming to make use of swathes of unused online storage space using a peer to peer distributed network. Users will earn tokens by donating their unused storage space and by “mining” — the process that keeps track of the blockchain.
The tokens will function as the service’s native currency, used to pay for file storage and retrieval.
Securities or not?
Carol Van Cleef, a partner at Baker Hostetler, said: “Based on
Van Cleef, however, was not surprised by
Filecoin raised $52m with a pre-sale of tokens that took place last week.