On July 10, 2019, Blockstack Token LLC (“Blockstack”), a wholly-owned subsidiary of Blockstack PBC, a Delaware public benefit corporation, became the first company to have an offering of digital assets qualified by the U.S. Securities and Exchange Commission (“SEC”) under Regulation A.
Blockstack is a technology company that offers an open-source blockchain-enabled network for developers to build and publish their own decentralized applications. According to Blockstack’s website, over 165 applications have been built on the Blockstack platform. Purchasers of Blockstack’s tokens (“Stacks Tokens”) will be able to use the tokens on its platform.
Token offerings have been under increasing scrutiny, especially with respect to whether or not tokens are securities. In its offering circular disclosure, Blockstack acknowledges that the Stacks Tokens are characterized as investment contracts under the Howey test, while noting that the Stacks Tokens “will not have the rights traditionally associated with holders of debt instruments, nor…equity.” The disclosure, in its discussion about the nature of Blockstack’s decentralized network, also references the SEC’s recent guidance on evaluating whether digital assets constitute securities for purposes of the Securities Act of 1933, as amended (the “Securities Act”).
Many blockchain-based companies have conducted token offerings in the United States under various securities exemptions, including Regulation D, which do not require SEC approval. One notable difference in Regulation D offerings is that general solicitation, such as advertising, is not permitted in offerings to non-accredited investors and, in certain other offerings, the number of participating non-accredited investors will be limited. Blockstack’s approval to offer its tokens under Regulation A will allow an unlimited number of retail investor to buy Stacks Tokens and permit Blockstack to conduct advertising activities.
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F. Dario de Martino
Dario de Martino is a partner in the Corporate Department of Morrison & Foerster’s New York office, and serves as the Co-Chair of MoFo’s Blockchain + Smart Contracts Group.
Mr. de Martino’s practice focuses on domestic and cross-border corporate transactions, principally in connection with public and private mergers and acquisitions, joint ventures, private equity transactions, and corporate governance matters.
He represents a broad array of U.S.-based More ›
John T. Owen
John represents issuers and underwriters in complex capital markets transactions, working with issuers in more than 15 countries and representing clients in transactions that have raised in excess of $50 billion in gross proceeds over the last five years.
John’s experience includes offerings of high–yield debt, equity, and equity–linked securities. He has worked with a variety of companies across industries, including life sciences, technology, telecommunications, More ›
Alfredo B. D. Silva
Alfredo B. D. Silva represents public and private technology companies and strategic and financial investors in a broad range of capital markets transactions, early- and late-stage financings, and corporate governance matters in a variety of industries, including Life Sciences, Health Tech, FinTech, and SaaS. More ›
Susan I. Gault-Brown
Susan serves as chair of the firm’s Investment Management Group and co-chair of the firm’s Blockchain + Smart Contracts Group.
Susan advises participants in the investment management, FinTech, and financial services industries—including investment advisers, exempt reporting advisers, registered funds, private funds, broker-dealers, funding portals, commodity trading advisors, commodity pool operators, FinTech companies, and blockchain and cryptocurrency companies—on regulatory, transactional, and counseling matters involving the securities More ›
Daniel R. Kahan
Dylan Kelsey Naughton
Dylan Naughton is an associate in Morrison & Foerster’s Corporate Department.
Her practice focuses on representing private and public companies in a variety of corporate and securities transactions. Ms. Naughton advises issuers, large financial institutions, investment banks, investment companies, real estate investment trusts, and sponsors in connection with debt and equity offerings, follow-on offerings, investment grade and high-yield debt offerings, at-the-market and medium-term note programs, More ›