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Regulated Token Offering

Regulated Token Offering

A public offering with a cryptocurrency token which has been qualified by the SEC under Regulation A+ or a similar exemption, making it open to both accredited and non-accredited investors.

A Regulated Token Offering is a type of Initial Coin Offering (ICO) for a cryptocurrency which has been qualified by the US Securities and Exchange Commission under Regulation A+ framework. Regulation A+ is an alternative to traditional initial public offerings with more lenient disclosure obligations that is made specifically to help early-stage startups raise money.

Tier 1 and Tier 2 offerings

Regulation A+ is an exemption to federal securities laws that enables companies to offer and sell up to US $50 million worth of a security in a 12-month time period. There are two tiers of offerings:

  • Tier 1: Security offerings of up to $20 million in a 12-month period
  • Tier 2: Security offerings of up to $50 million in a 12-month period

This regulation also provides for the preemption of state securities law registration and qualification requirements for securities offered or sold to "qualified purchasers" in Tier 2 offerings. However, Tier 1 offerings are subject to federal and state registration requirements.

Security registration for regulated token offerings

Under Rule 501 of Regulation D of US federal securities laws, a company must register their security with the SEC or find an exemption from registration requirements in order to offer the security to US non-accredited investors. In order for an individual to qualify as an accredited investor, they must have an individual net worth or joint net worth with their spouse that exceeds $1 million, excluding the person or couple's primary residence. Alternatively, an individual can qualify if their individual income exceeds $200,000 in each of the two most recent years, or if their joint income with their spouse exceeds $300,000 in the same time period, so long as they have a reasonable expectation of reaching the same income level in the current year.

First regulated token offering in the United States

Blockstack announced that it had filed for a Tier 1 Regulated Token Offering with the SEC in April, 2019. The company later became the first blockchain startup to receive SEC approval in July, 2019. This made Blockstack's token offering the first ever legally-compliant token offering that was open to both accredited and non-accredited investors in the United States.

The company ran their public token offering under regulation A+ and raised $28 million. According to the founders of Blockstack, Muneeb Ali and Ryan Shea, they spent approximately $2 million and spent 10 months of their time to gain approval from the SEC to go ahead with their regulation A+ regulated token offering. Muneed Ali commented on Blockstack's time gaining approval from the SEC by saying:

This can potentially set a precedent for others in the industry, not just for public offering, but also as a path to launch new public blockchain and establish a path to bootstrapping decentralized ecosystems.

Prior to the approval of Blockstack's token offering, US non-accredited investors had been unable to participate in any legally-compliant cryptocurrency token offerings. However, numerous ICOs took place between 2013 - 2017 that were open to all investors regardless of qualification, as the SEC and other global regulatory bodies had yet to clarify how they would treat cryptocurrencies and token offerings. Beginning in late 2017 up until the Blockstack case, US citizens were widely excluded from participating in token sales once it became clear that projects who accepted funds from US investors may face future legal consequences. The SEC has since published a Spotlight on Initial Coin Offerings which provides some clarity.

Following Blockstack's approval, the SEC also approved an Ethereum-based token called Props, which is integrated into streaming platforms including YouNow and XSplit.


July 11, 2019
YouNow, with Ethereum-token PROPS, becomes the second to receive SEC approval for a token offering .

One day after Blockstack's approval, PROPS announced that they too had qualified for a regulated token offering under Reg A+.

July 10, 2019
Blockstack receives SEC approval

Blockchain startup blockstack becomes the first to have an SEC-approved token offering available to US investors.

April 2019
Blockstack announced that it had filed for a Tier 1 Regulated Token Offering with the SEC in April, 2019.
December 11, 2017
SEC publishes Statement on Cryptocurrencies and Initial Coin Offerings

The article makes clear that the SEC has not given approval to any cryptocurrency sales or trading and that investors should proceed with caution.



Further reading


Blockstack announces plans to raise $50M in a SEC-regulated token offering - The Block

The Block


April 11, 2019

Blockstack Holding First Regulated Token Offering

Jeffrey Rodack


July 11, 2019

Blockstack Token Sale Becomes the First SEC-Qualified Offering in U.S. History

Muneeb Ali


July 10, 2019

How Non-Accredited Investors Can Get Involved With Security Tokens

Daniel Frumkin


November 1, 2018

SEC Clears Blockstack To Hold First Regulated Token Offering - Digital Securities


July 11, 2019

SEC Gives YouNow's Ethereum Token 'Props' Reg A+ Approval

Daniel Kuhn


July 11, 2019

SEC Qualifies First Token Offerings Under Regulation A

Alfred Browne, Karen Ubell, Nancy Wojtas, Kenneth Juster, Katherine Snow, Rodrigo Seira


July 18, 2019

US SEC Approves Blockstack Token Offering Under Regulation A+

Max Boddy


July 11, 2019

Documentaries, videos and podcasts


Blockstack to launch the first regulated token sale

July 11, 2019

US SEC Approves Blockstack Token Offering Under Regulation A+ | TGoC

July 11, 2019




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