Morrison & Foerster partner Dario de Martino, co-chair of the Blockchain + Smart Contracts Group, spoke to Law.com about the first-ever SEC approved token offering that occurred earlier this month. Dario discussed what made Blockstack, the only company to successfully offer a token instead of ownership shares under Regulation A+, the “chosen one.”
Dario told Law.com that Blockstack successfully addressed a number of the SEC’s concerns in its offering circular. “It clarifies that the tokens do not share the characteristics as debt or equity securities,” he said. “They clearly acknowledge that while they are not debt or equity securities, they are still investment contracts under the Howey test, and therefore securities.”
Blockstack also effectively addressed the issue of decentralization, which is essential to avoiding the securities designation, Dario said. Morrison & Foerster has been working to come up with a sufficient definition of decentralization since the original distribution of tokens often amounts to an offer of securities. “Blockstack set a new path for these SEC-qualified token offerings for a centralized project to gradually become a decentralized network,” he said. The company plans to devote the net proceeds of the offering to accelerate the development of their decentralized computing stack and app ecosystem.
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