Cryptocurrency
Blockchain
US SEC approves token sales by gaming start-up
The US Securities and Exchange Commission (SEC) has given the go-ahead for crypto gaming start-up Pocketful of Quarters (PoQ) to issues crypto tokens on the Ethereum blockchain.
The SEC Division of Corporation Finance yesterday issued a no-action letter to PoQ, which allowed the firm to sell its Quarters tokens without registering them as securities. As noted by industry website Coindesk, this is the first time the SEC grants such an approval to an ERC-20 token and only the second-ever issued by the regulator. The commission issue its first no-action letter in April to TurnKey Jet, a business-travel start-up offering a stablecoin pegged to the US dollar.
Not a security
“Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel that the Quarters are not securities, PoQ offers and sells the Quarters without registration under Section 5 of the Securities Act and does not register Quarters as a class of equity securities under Section 12(g) of the Exchange Act,” the letter reads.
No secondary trading
The SEC Division of Corporation Finance based its recommendation on a number of factors including the fact that PoQ would not use any funds from token sales to build its Quarters platform, which is already fully developed and “will be fully functional and operational immediately upon its launch and before any of the Quarters are sold”.
The watchdog also notes that players will be able to use Quarters immediately for their intended purpose (gaming) at the time the tokens are sold. The tokens’ price will be fixed by PoQ, which will the only seller of the coins, as transfers to unapproved accounts would not be possible. This, in turn will prevent secondary trading.
Featured image: Mark Van Scyoc / Shutterstock.com
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