Thread by @msantoriESQ

🚨🚨🚨 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.

https://twitter.com/muneeb/status/1335972550560669698

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.

PLUS

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?

11/

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!