What's the practical difference between this and issuing shares? Like, can you just issue coins at a 1:1 ratio to shares to skirt securities regulations? It smells fishy.
Tokens often have dividend (through staking and different risk taking model than shares) and voting rights. You have way less legal protection.
Because the system, e.g. Solana, is decentralised and all information is public (in the optimal case), there is less need for information and litigation rights. All market participants can have, more of less, the same information.
Most of the information related to the value of a share is part of the "real world" and has nothing to do with who owns how much of what.
ICOs aren't really like raising equity, it's more like buying coupons for a service before it exists, in the hope that the service will be extremely popular so that the value of the coupons skyrockets.
It's no different than Nike selling $300 million of shoes to a sneaker flipping hedge fund.
It works, everyone agrees, everyone's liquid, they like liquidity. Everyone spends a fraction of the same amount on marketing and gets to attempt selling the product at a nice profit.
The development organization is still capitalized either way, and still owns a ton more shoes to sell whenever it wants.
There does seem to be some regulatory testing going on here.
Were they able to segment investments, so that only non-US investor money flowed into the sale? Does having US-based VC organizations participate create a nexus for the SEC to have authority?
It will be interesting to follow the legalities of this, so perhaps others can model the sale and use to successfully float new tokens without scrutiny by the SEC.
Or does the "Duck Rule" not apply to this sale? What say you Gary Gensler?
Here is a quick google search for "Solana Reg D" showing the one from 2018
https://www.sec.gov/Archives/edgar/data/1735643/000173564318...
> It will be interesting to follow the legalities of this, so perhaps others can model the sale and use to successfully float new tokens without scrutiny by the SEC.
This has never been an issue. The only issue the SEC has ever had was with token transactions that did not file any regulatory exemption and sold to unaccredited investors. Many people want clarity about the ability to still do that.
Finally, the SEC regulates transactions not assets. The irony is that some transactions create perpetual securities where all transactions of that type of asset is always a securities transaction to the point where the distinction is not useful. But this is important to understand when you are trying to do a securities transaction for something that is not intended to be a security and how the SEC will react. Being deemed a perpetual security is untenable for crypto assets because there had not been liquid places to trade crypto securities and every centralized user needs to be a registered broker dealer (lol). A transaction itself can be a securities transaction while the ensuing asset is not. The SEC has never had an issue with that reality and hasn't penalized anyone for this kind of conversion.
Cheers