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Blockstack’s SEC Worries Are Far from Over
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Blockstack recently was approved to offer its security token offering (STO) to everyday retail investors. However, there’s an indication that the crypto startup may still have an uphill battle to climb.
The process was long and tedious for Blockstack, the first-ever SEC-approved Reg A+ token offering. However, now with this approval, Blockstack could set the stage for a new wave of security token offerings approved by the SEC.
There have many other STOs which have lobbied the SEC for approval, but Blockstack is the first. This also means that they will be expected to set an example for the rest of the industry. In short, how successful Blockstack is will determine the pace of future approvals by the SEC down the line.
According to Drew Hinkes, an attorney at Carlton Fields and Athena Blockchain general counsel, Blockstack’s offering is the “missing piece of the puzzle for compliant sales of utility tokens that are also investment vehicles.”
However, Blockstack’s planned STO also carries with it significant risk. There currently does not exist a blockchain that relies on a protocol token which is classified as a security. The Blockstack experiment could push the industry to create separate blockchains specifically for security tokens, an idea which has been floating around the space for some time.
Moreover, if Blockstack fails in its implementation of its STO, then the entire industry will definitely suffer. In many ways, the SEC is using Blockstack as a pilot program to see whether other approvals are appropriate. If successful, STOs will likely accelerate as we go into 2020.
Do you believe Blockstack will be successful in leading the way for other security token offerings? Let us know your thoughts below.
Image courtesy of Blockstack blog.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
