🚨🚨🚨 1/ If true, this is amazing. Unprecedented. This would represent the first ever transmogrification of a token from a security to a non-security, where the journey was explicitly blessed by the SEC.
2/ "Dude I don't care about a new internet or staxxx or whatever"

You should. The question of how a utility token can enter the world a security but then become a non-security has been open - painfully open - for years. SEC just blessed one very specific answer.
3/ @muneeb is really the one who should be doing this thread, since he lived this struggle. But from what I could see as a lawyer sometimes involved in Stacks transactions, it has been a long and complex road to compliance, complete with forks and detours.
4/ Blockstack published its whitepaper in 2017, but when it came time to sell tokens, they didn't follow the SAFT framework (SEC Reg D), and they didn't do an ICO (SEC jail).
5/ Instead, they structured a more complex side-by-side offering:

One sale only to non-US persons, under SEC Reg S.


One sale to US persons, under SEC Reg A+.
6/ The Reg S tokens could trade freely outside the US. The Reg A+ tokens, which the SEC "qualified" were locked up.

BOTH sets of tokens, however, were considered securities by the SEC.

Until now.
7/ Muneeb, correct me if I'm wrong here - this is all from my fragile crypto memory
8/ So what happened to cause this change? What switch got flipped?

Remember, under the SAFT framework, there is no "transformation" from security to nonsecurity. The SAFT is a security, but the seller doesn't deliver any tokens until it's built the network.
9/ Here, there are tokens out there in the world, in circulation from the outset. Some of them are just locked up until...

Until what?

Cynics would say "Until the SEC is happy with the state of the network - that it's 'fully decentralized'"
10/ "Why give the government the only set of keys to unlock your network?"

Well, this seems to be just what the Blockstack team did here, so... is it really all that cynical? Is it any worse than any other token sale methods, in practice?

Malus: It takes years. It's complex. It takes multiple offerings. You might have to use an intermediary token. Haters will say you're wasting your time

Bonus: Certainty. You get the SEC seal of approval that these things are not securities.

But is this right?
12/ At the end of the day, we are still left with the open question: What happened to cause the token to shift from security to non-security?

Whether you guess and roll the dice using a SAFT and Reg D, or elect for the SEC to answer for you via REG A+, is there a difference?
13/ I think the buyers will answer that question for us.

Is anyone going to be interested in buying the next Reg A+ token?

Now that the first of these tokens looks like it might make it through the gate, perhaps someone will!

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More from @msantoriESQ

20 Nov
1/ 🚨 BREAKING: US Office of the Comptroller of the Currency proposes rule prohibiting large banks from discriminating against "legal but disfavored" customers like oil & gas biz, independent ATM operators and of course...

crypto companies.
2/ Crypto OGs know the single greatest impediment to widespread adoption has been and continues to be the lack of access to banking services.

In its early days, Bitcoin was caught up in Operation Chokepoint, and crypto more broadly is still caught up today
3/ Operation Chokepoint is a long-standing effort by political powers to cripple the growth of industries that were perfectly legal, but that they found distasteful.
Read 18 tweets
16 Sep

@Krakenfx just won approval to create America’s first crypto bank.

World, please meet Kraken Financial. Kraken Financial, world.

Wait, a what? Kraken is a BANK?! How did this even happen?!

Allow me to threadeth. 👇
2. It all begins on this island call Yap

Heh, actually it begins in Delaware! You might remember from back in 2016 the Delaware Blockchain Initiative, an effort to build a bridge between a US state and the crypto industry.
3. We announced it at Consensus’ keynote that year coindesk.com/delaware-gover…. Then-governor Jack Markell made a joke about being Satoshi. He laughed. The audience laughed. Somebody did an ICO in the background. It was a simpler time.
Read 31 tweets
13 Jul
1/ BREAKING 🚨 popular crypto app Abra charged by and settles with SEC for offering securities swaps. This is interesting for a few reasons. Short thread follows.
2/ According to the SEC's order, Abra was offering Robinhood-like securities trading, except there were no actual stocks under the hood.

Users would simply bet on the price movement of the stock without actually owning it (or owning an entitlement to it)
3/ This in itself isn't shady of course. They were offering a "derivative" - a product that is useful for many purposes including (i) hedging and (ii) betting.

In this instance, SEC seems to take the position that it was mostly the latter.
Read 17 tweets
6 Feb
1/ 🚨BREAKING🚨: SEC Commissioner @HesterPierce today publicly proposed a safe harbor for token sellers building decentralized networks.

It is an elegant solution to the most complex legal challenge of this crypto era.

Thread is go.👇
@HesterPierce 2/ The proposal seems straightforward: So long as you, dear token seller, comply with the securities laws in selling the token initially, you've got 3 years to get the network off the ground, during which SEC won't come after you.

Could it really be that simple? Read on.
@HesterPierce 3/ Recall that, to sell securities in the US, the law requires you to register them with the SEC (e.g. an "IPO"), which is an expensive and lengthy process, or rely on an exemption.

(usually Regulation D for private placements to accredited investors, or Reg S for offshore sales
Read 19 tweets
28 Jan
1/ For the first time in a long time, I'm at a traditional-investor-focused crypto event. Been a long time not because I don't like them or don't see ROI, but because they'd become more rare post-2017. Are we seeing the beginning of a renaissance? Some interesting perspectives...
2/ for example, this slide by @ARKInvest laying bare the cultural canyon between east and west coast crypto views
3/ "the fallacy of the crypto fund"
Read 7 tweets
9 Oct 19

1/ IRS releases long-awaited guidance on crypto forks and airdrops.

It is not good.

Begin thread send tweet 👇
2/ The new guidance covers two circumstances: airdropped coins and forked coins. Sadly, it seems to confuse the two, assuming that airdrops and forks often occur at the same time or are otherwise functionally related.
3/ First, IRS says "If your cryptocurrency went through a hard fork, but you did not receive any new cryptocurrency", then no tax due. Wait, what?
Read 21 tweets

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