The Securities and Exchange Commission (SEC) has approved Blockstack, a Blockchain -based startup, for a $28 million token offering under Regulation A+ framework.
According to the press release, the company will initiate the sale on Thursday and can legally raise funds from retail investors within the United States and other global markets.
Under Regulation A+, the SEC is allowing early-stage companies to raise funds up to $50 million from retail investors, and unlike initial public offering (IPO), it has lenient disclosure obligations.
Though many startups raised funds under this investment route, Blockstack has become the first blockchain-based company to get approval for this.
According to Blockstack, the company has worked with the regulator to establish a legal framework for security token offerings (STOs). Its co-founders also revealed that the process was expensive and the company spent $2 million for the approval for the sale.
“It is a truly groundbreaking day for decentralized technology and, by extension, digital rights. No company on the internet should have so much power that it can debate if it should treat users in the right way or not. By building technology that can’t be evil, trusting centralized organizations to make the right choice is replaced by mathematical proofs,” Muneeb Ali, co-founder and chief executive of Blockstack, said.
A well-funded blockchain company
Blockstack is developing a decentralized computing network that supports over 160 decentralized applications. It will distribute tokens called Stacks (STX) to its investors, which can be used to register digital assets like domain names, inscribe and enact smart contracts, and process transaction fees.
In a token sale in 2017, the company raised $47 million under the Regulation D framework of the SEC, which permits only accredited investors to put money in a company. Companies raising funds under Regulation D, however, do not need approval from the market regulator. Blockstack also raised another $5 million from venture capitals.
