Bans and regulations are encouraging novel workarounds by cryptocurrencies.
Outright bans and an increased understanding of the risks involved with initial coin offerings (ICOs) is encouraging self-regulation and novel workarounds.
Alon Goren, founder of Crypto Invest Summit and Principal at Wavemaker Genesis, an early-stage investor in blockchain and crypto companies, cites Overstock’s decision to file its tZero token issuance as a Reg. D exemption according to SEC guidance, as well as SPiCE VC’s Securitize—the world’s first platform on blockchain to enable clients to issue fully regulation-compliant ICOs—as examples of self-regulation.
“People are sticking to their guns saying these are utility tokens, but they are smart enough to know we are not going to sell any of them in a privy sale to people who aren’t accredited investors,” explains Goren. “They have to come up with creative ways to let the general public get involved in their companies, so they are doing things like air-dropping tokens and special marketing.”
Goren also points to Everipedia, a decentralized blockchain version of Wikipedia, which is planning on building on the EOS platform. EOS, which has a lot of money from ongoing token sales, decided to invest the full $30 million that Everipedia was raising, according to Goren. “But they intend to gift all of those tokens that they are buying from Everipedia to holders of EOS coin, so if you hold EOS in your wallet, on the day they launch Everipedia you are going to get Everpedia IQ tokens in your wallet,” he explains. “It will become one of the top ten most-held tokens in the world instantly because EOS already is.”
Other companies are doing similar things, such as offering free tokens for signing up for newsletters or to people registering to use products. “It’s an exciting model as it rewards people who participate, but it also doesn’t penalize the company or the public for the regulation that makes it hard for regular people to get involved,” concludes Goren.