Blockstack Gets Crypto's 1st Reg A+ Approval & Trump Tweets BTC
1st Crypto Reg A+ Approved While Trump Tweets About Bitcoin
Why Blockstack’s Offering is Such a Big Deal
Facebook Libra is still very big news in the cryptoeconomy. The last couple of weeks are mostly regulators and government officials in various countries telling them to stop or that Libra might be banned in their country. When something more concrete happens, we’ll be watching. Until then……
This week we have 2 big stories.
Reg A+ is something I’ve written about extensively on my blog P2PLendingExpert.com and most of that writing, including in my book is about the peer to peer lending world and less about cryptocurrencies. It’s known as the mini-IPO and it was part of the JOBS Act in 2012 to try to get more companies to go public by reducing the costs if they go public to raise smaller amounts of up to $50 million per year.
I’ve been curious for some time if a company in the cryptoeconomy would use Reg A+ as a way to raise money and stay compliant in the US without all the ICO/IEO/This token is a security but we are going to say it’s not nonsense that’s been going on.
And now it’s happened.
Story #1: Blockstack Gets SEC Approval for Reg A+ Offering
Blockstack’s Stacks token offering got SEC approval this week making it the first crypto project to use Reg A+ to raise funds. Blockstack is a decentralized computing network that enables the building of apps on top of it to run on their network. Here are some places you can read the announcement:
The WSJ (behind a paywall)
The announcement on Blockstack’s own blog gives the most detail where they will raise $28 million in cash via this offering starting July 11 (yesterday). This is the tweet announcing it from CEO Muneeb Ali.
They’ve raised money twice before: VC investment and a 2017 ICO token offering that raised $47 million under Reg D.
An additional $12 million will go into app mining, which is what they call their developer program. The combination of building of the apps and some maintenance of the network is covered in their app mining.
Reg A+ has 2 tiers and the Tier 2 offering allows them to raise up to $50 million per year. Tier 1 caps out at $20 million. To see the effect for retail investors in peer to peer lending platforms I suggest you read these 2 articles about Worthy and Streetshares.
Here is their Offering Circular, filed and approved by the SEC.
And important note in the Circular (p.2) and the first footnote is that 78 million of the Stacks voucher holders get a chance to convert their vouchers for 12c each while the general sale of the Offering is 30c each. The voucher holders are mostly those that received tokens in the 2017 ICO moving their ICO token to a compliant Reg A+ token. But if they want to buy more than their voucher then they pay the same 30c as everyone else.
One of the more interesting aspects of the Circular is footnote #3 that shows the costs.
For $40 million, they are spending $2.8 million in compliance fees. This is why more companies don’t use Reg A+.
But will Blockstack set an example of a way other crypto companies can offer securities in the US and be compliant with the SEC? No one knows but we can hope.
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Story #2: President Trump Tweets About Bitcoin for the 1st Time
In what some people are calling the biggest buy signal ever created, President Trump tweeted negatively about Bitcoin for the first time yesterday in a 3 tweet thread.
The most telling part of the tweet in many people’s opinions, including mine, is this very last part where Trump states (without saying so) that Bitcoin is a threat to USD dominance as the global reserve currency. Gotta pump that Dollar.
The no real value out of thin air comment is easily refuted since the USD is only valued due to the US Government’s issuance, or as more succinctly put
Read through some of the other comments in this thread if you get a chance.
The Cryptoeconomy Responds
Here are some of my favorite responses from those in the industry. Let’s start with one of my favorite legal people in the cryptoeconomy: Caitlin Long in her own thread
She mentions in her thread about what Wyoming is doing in crypto (natch since she’s a big advocate there). Also, how crypto is the first payments innovation in decades so at the moment Government doesn’t need to choose between crypto and the USD. Use both.
and here’s Jesse Powell, CEO of exchange Kraken
Coincenter’s Communications Director Neeraj Agrawal responds with a link to an article about privacy and surveillance. Those that follow Neeraj know he likes to joke and might be the meme king of CryptoTwitter but this is clearly serious business.
Jeremy Allaire, CEO of exchange Circle
and last but not least in one of the funnier responses, it turns out that one of Trump’s hotels accepted Bitcoin as payment for the purchase of a condo way back in 2013.
So President Trump tweeting about Bitcoin does 4 things:
He has 61.9 million followers that saw it as well as every news agency in the US and many in other countries. Great exposure
He expressed fear of overtaking USD dominance by pumping the dollar
Not to be too political but some Dems and Libertarians might buy Bitcoin just cause Trump crapped on it
With his penchant for lying, some may start looking at Bitcoin just because Trump said it has no value. Others knowing he lies all the time might figure the USD is getting weaker (or will soon) and look for alternatives
What do you think this kind of exposure brings to Bitcoin and other cryptocurrencies? Hard to see how it’s anything other than good.