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CoinList's Fifth ICO Is a $61 Million Bid to Tokenize All the Assets

The website aiming to be the gold-standard for token sellers has been picking up the pace.

Since spinning off from venture capital giant AngelList last October, New York-based CoinList has been able to make a spot on its website a coveted place for serious projects, even in a crowded market for compliant coin offerings. So, on Monday, the wider world of token entrepreneurs and investors took notice when the company opened registration for its fifth sale.

The new entrant? TrustToken, a platform that aims to simplify trading real-world assets on a blockchain.

TrustToken hopes to be a one-stop shop for those who want to launch such efforts, supplying the means for them to do everything from creating a legal entity for the asset and interacting with the fiduciary agent responsible for it, to fulfilling regulatory requirements and interacting with the blockchain.

The trust token being sold then acts much like insurance does for traditional securitization. The smart contract will require that a certain amount of trust token be set aside for any given asset. Those doing so will take liability for the asset, guaranteeing it on behalf of its holders.

Finer points aside, though, the addition of TrustToken is notable in that it follows just four previous sales held on the site: sharing economy platform Origin; live-streaming mobile app Props; decentralized web protocol Blockstack; and the token for cloud storage, Filecoin (whose creator, Protocol Labs, collaborated with AngelList to launch CoinList).

So, even with the uncertain regulatory environment in the U.S. remaining, TrustToken may be a sign that things are again starting to accelerate.

After a long lull following its Props sale in early 2018, TrustToken marks the second sale to go up in the space of a month.

“CoinList Capital conducts a really through diligence process,” CEO Andy Bromberg said, speaking to its latest project selection.

Further, he went on to highlight the team members’ strong pedigrees, prior experience and the promise of its business model, telling CoinDesk:

“The net of all that is we’re excited to offer this opportunity.”

Trust token sale

So, while not the largest raise on the platform, TrustToken is seeking a big ask from investors in what’s turning into a bear market year for cryptocurrencies broadly.

With the listing, TrustToken aims to raise another $61 million selling 435 million of its ethereum-based trust tokens. (The company has previously raised $20 million in backing from major investors, including BlockTower Capital, Danhua Capital and Andreessen Horowitz).

Registration for the sale (which will include know-your-customer and anti-money laundering checks) will remain open through July 17 and then sale will begin on July 18. The team has not set an end date for the sale, but it won’t raise more than its goal.

Still, it’s important to note that money will be used by the team to prove out its model of asset tokenization, one where the token is used to decentralize a crypto method of underwriting. The more it raises, the more new tokens it can launch to prove out and refine the model.

Once it has refined its model for tokenizing assets at scale, it will open up its platform for institutions to tokenize their own assets, with the eventual goal of letting anyone create a token that represents their own property.

“We start with asset tokenization, but we think it’s really going to unlock human potential, and we think the last big thing to unlocking human potential is actually having democratized financial assets,” TrustToken CEO Danny An told CoinDesk.

Tokens at stake

Right now, the company is best known for TrueUSD, a stablecoin based on the U.S. dollar that the company says can actually be redeemed for government-backed monies, but the sale itself is for the trust token, which makes this kind of offering possible.

Under this model, trust token would be necessary for the creation of assets like TrueUSD. Provided it raises enough funding, it plans to replicate TrueUSD with the euro and yen, as it further refines its model.

“Whenever you’re doing mini-IPOs of assets all across the world with different legalities and language, you kind of need a standard way of insuring that it’s a trustworthy asset,” An said.

For high-volume assets, like a stablecoin, stakers would be remunerated with transaction fees, while for lower-volume assets, such as real estate, stakers will be paid out of inflation in the tokens representing that asset.

As an example, if piece of land were represented by 100 TrueLand tokens, and the smart contract said that stakers would be paid 3 percent each year, three new tokens would be created annually and divided up among those guaranteeing the land for TrueLand holders.

With a stake in place, that signals for investors looking for opportunities that an asset has merit. “Trust token is a way to essentially affirm where it’s worth it or trustworthy to send money to,” An explained. 

Path ahead

Despite these big goals, though, An’s team is proceeding cautiously and refining its model in house first.

Following the release of the stablecoins it creates, his team plans to create tokens for real gold and silver reserves. Because it is providing the liquidity for each of these products, An explained, each new token dramatically increases the company’s workload, so it’s cautious about overstating expectations.

In the next one or two years, it expects holders of trust tokens to be able to participate in staking, but it’s unforeseeable how soon it will be able to open up its platform for other entities to create new asset-backed tokens.

For participants in the CoinList sale, the token itself should become available to buyers sometime between January 2019 and the first quarter of 2020.

“We are essentially a securitization company, so we are waiting to be one of the last followers on SEC clarity on utility tokens,” An said.

He added:

“Our company interacts with basically every regulatory agency so we are very legally conservative.”

Image via TrustToken

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Origin Token to Raise $6 Million in CoinList Investor ICO

Decentralized marketplace startup Origin Protocol is looking to expand its audience, as well as raise more capital, through a compliant token sale.

Announced Monday in a press release, Origin has set a target of $6.6 million for the offering, with SEC-registered CoinList Capital acting as its investment adviser and issuing platform.

Origin co-founder Josh Fraser said that, more important than the money, will be the opportunity to grow its network with endorsement from CoinList, an AngelList spin-off. The startup wants “as many people to participate as possible,” he told CoinDesk.

Fraser continued:

“There’s so many scammy projects out there, so anything you can do to set yourself apart is [great] … We’re really excited for a chance to work with CoinList and to be able to be the recipient of a very anticipated sale. If you look in our Telegram, you see people asking every single day to be a part.”

That being said, only accredited investors will be able to buy into Origin on CoinList’s platform at the moment. The co-founder explained that “while not everyone can participate yet, it goes a long way to allowing more people to participate.”

Origin will use the funds to further flesh out its blockchain. And while it isn’t in urgent need of new funds – having already raised $28 million in a SAFT sale and $3 million in a prior venture capital round – the startup still intends to make good use of the sale proceeds, according to Fraser.

“We’re going to continue building as we said we’re going to do, and we’re on schedule to launch [in the third quarter] like we said we would,” he said.

Fraser noted that the fundamental question the company is asking is whether open-source protocols could replace “not one, not two, but dozens of major companies.”

“We’re creating a platform for sharing economy type marketplaces … looking at how you can build decentralized Uber, decentralized AirBNB – these marketplaces where we can use a blockchain to create peer-to-peer marketplaces rather than using giant corporations and monopolies,” he said.

Toolbox image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Registration for Dfinity's 'Biggest Airdrop Ever' Is Closing Soon

The registration period for what one startup claims to be the largest airdrop ever will come to a close on Friday.

“Decentralized cloud” company Dfinity announced its token distribution plans last week, and revealed in a statement that it will give away 35 million Swiss francs (about $35 million) worth of its DFN tokens to “hundreds of thousands” of community members. The company, which purports to be a “blockchain computer with unlimited capacity,” will launch its network later this year with the aim of staking a claim in the already competitive market of aspiring blockchain cloud computing services.

Backed by major tech investor Andreessen Horowitz and crypto hedge fund Polychain Capital, Dfinity is also in the process of conducting a private sale of its forthcoming cryptocurrency, the conclusion of which the company says will push its total funding to nearly $200 million.

Likewise, unlike other companies in the space, Dfinity has eschewed token distribution via an ICO in favor of what might be called a “compliant airdrop.”

In practice, this means Dfinity community members must undergo and pass a know-your-customer (KYC) and anti-money laundering (AML) verification process facilitated by AngelList spinoff CoinList before they can benefit from the massive token giveaway. June 8 is the deadline for completing the process.

CoinList previously told CoinDesk that it developed its compliance tool (also dubbed Airdrops) to provide a means for token issuers to conduct airdrops without violating securities laws. Despite this, Dfinity is still excluding U.S. citizens and residents from participating, and cited “regulatory uncertainty” as its rationale in a Medium announcement.

Dfinity community members who are able to participate each stand to gain between around $500 to $2,500 worth of tokens, and those who have followed the projects’ various community channels longest will receive their tokens first.

Unlike other nascent blockchain projects, Dfinity has not carried out fundraising on the ethereum blockchain, meaning it has not sold ERC-20 tokens as “placeholders” until it launches its technology in full. As such, KYC/AML verified community members must wait for the network activation to receive their tokens.

Dfinity expects to launch its blockchain in quarter four.

Falling coins image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Compliant Airdrops: CoinList to Offer Investors Free Crypto Giveaways

Who thought giving something away could be so complicated?

That’s the question crypto innovators have had to come to terms with since the concept of “airdrops” – or the practice of gifting tokens in massive giveaways – has come under the scrutiny of government regulators.

But with the launch of a new product Wednesday, CoinList, an initial coin offering (ICO) facilitator spun out of the renowned startup incubator AngelList, is looking to streamline the process of airdrops in a way that doesn’t run afoul with the law.

Aptly named Airdrops, the product runs users through compliance checks and attestations so that a token issuer can give CoinList’s users free tokens. On top of that, if the issuer is looking for users that meet certain criteria (be it a profession or location), they can verify that users actually fit those backgrounds.

In this way, CoinList CEO Andy Bromberg believes he has found a way to enable airdropped offerings at a time when many in the industry are looking for a compliant service. Token issuers themselves have had no shortage of issues here, with some, including video-monetization service Stream, even backing off the concept altogether because of the regulatory uncertainty.

Indeed, the SEC hasn’t taken a formal stance on how it views crypto tokens delivered through ICO, airdrops or other forms of sales and giveaways, but it’s clear regulators are currently investigating that question.

Still, Bromberg is confident in his assembled solutions, and in interview, he hinted at dialogue with regulators that would attest to the viability of the service.

“In our typical compliance first mindset, we sat down and said: Is there a way to pull this off without violating securities laws? And what we came to is the compliant Airdrops product,” Bromberg told CoinDesk.

He continued:

“I can’t comment on individual discussions with the SEC. What I can say is we are in frequrent communication with them and — based on our understanding of securities law — we are very comfortable with this.”

Not only does the startup believe it has a solution for working under existing securities law, but it’s also opening up its existing user base of past investors to new token issuers. Once users have gone through the company’s compliance flow, they will be verified to receive airdrops, and CoinList will take a nominal fee from users (less than $1 per airdrop) to accept new tokens.

To date, according to its website, CoinList has run $850 million worth of token sales through its platform, representing what could be a vast pool of people interested in investing and taking part in future crypto tokens.

Compliance as a service

While that pool of potential investors will likely be attractive for token issuers, Coinlist’s product is opt-in – a feature added to reduce spam and mitigate the security threats that have become a common annoyance from crypto enthusiasts involved in such offerings.

Also, CoinList says it’s only willing to work with token issuers that are focused on complying with the law. And that’s partly because CoinList will be promoting these projects for issuers.

Still, CoinList’s Airdrops product seems to be set up whereby all the compliance effort is offloaded from the issuer, which many issuers will like since many are not securities law experts.

CoinList’s product allows for airdrops that might fall under Regulation S and Regulation D and will also collaborate with AngelList spin-off Republic, which has a license to sell securities under limited conditions to non-accredited investors using Regulation CF.

The company is also doing a country-by-country analysis to determine what sorts of checks issuers will need to do in order to airdrop to users around the world.

Depending not only on the goals of the issuer and who they want to give to, different levels of know your customer (KYC) and anti-money laundering (AML) requirements will be needed, and whether issuers can to both accredited and unaccredited investors or one or the other.

And all of this has already proven enticing to token issuers. Bromberg told CoinDesk the company is in negotiations with more than one issuer to use its Airdrops product but declined to disclose which ones.

While CoinList has so far been focused on fundraising, Bromberg said that potential issuers will not have to have a token sale on the platform in order to use the new product.

“We’re interested in exploring this model where in some cases … funding might be separate from distribution,” Bromberg said.

The right recipients

Still, different companies might have very different goals for an airdrop, and Bromberg gave two examples of use cases he believes could work well.

For example, he said a company with a token it believes regulators will recognize as a utility token, something used primarily to access a certain service, can use CoinList to get it in the hands of people who are likely to be the most interested.

This issuer might target software developers, and in this case, CoinList would enable them to authorize the airdrop to check a users Github API and distribute to developers with a certain commitment frequency.

Getting the tokens in the hands of people who will ultimately use the token as intended “will help that network get to a place where that token is no longer a security,” Bromberg said.

Still, there could also be companies that want to issue securities, Bromberg said: “A company could tokenize some of their equity and give that equity, give those tokens, to early users on the product.”

As such, CoinList will also offer a wide array of ways to authenticate users as meeting certain objectives, be it a certain audience on Twitter, a certain location in the world or a certain occupation. It can use APIs off other websites to verify these target goals to insure that an airdrop recipient meets them.

Because it is running KYC/AML checks on all of them, it also verifies that each user receives a token allocation only once. “It prevents gaming the system,” Bromberg said.

It’s an approach designed for an excess of caution, but one that’s also ready to adapt.

“Whether or not these things are securities, we are treating them like securities to be as safe as possible,” Bromberg said. To that end, some startups have been meeting with the SEC to ask for what’s called a no action letter, a document that says regulators believe a given company has not violated securities law.

If something like that comes to pass, CoinList is confident enough that the platform is ready for that, too.

Bromberg concluded:

“We’d be open to airdropping without the compliance layer.”

Jelly beans photo via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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AngelList ICO Spin-Off CoinList Raises $9.2 Million in Funding

A platform for token offerings first incubated at venture firm AngelList has completed its Series A.

Launched last May, CoinList revealed Wednesday it has raised $9.2 million to build out a platform where accredited investors can invest in initial coin offerings (ICOs), or custom cryptocurrencies issued by startups and open-source projects. Investors in the round include Polychain Capital, FBG Capital, Libertus Capital, Electric Capital, CoinFund and Digital Currency Group.

The news closely follows CoinList’s announcement in October that it would continue to pursue its model, one that had seen it offer support for Filecoin’s record-breaking September ICO, as a standalone company.

Still, that’s not to say there won’t be changes that reflect the sector’s shifting regulatory environment in the U.S.

In statements, CoinList co-founder and CEO Andy Bromberg notably said the company plans to use part of the fresh capital to build a secondary exchange for blockchain-based securities.

“There is not right now a good tokenized exchange for securities,” Bromberg told CoinDesk. As such, CoinList hopes to be the first to introduce “a liquid and compliant secondary exchange for securities.”

The statements point to the growing tension between crypto innovators, who have argued that cryptocurrencies, even when issued in public sales, can be considered commodities, and U.S. regulators, who have largely asserted such creations are captured by securities law.

Still, in this environment, CoinList said it hopes to distinguish itself by offering investors access to high-quality projects that buck the fly-by-night reputation industry offerings have sometimes attained.

Bromberg told CoinDesk:

“The best projects are being directed toward CoinList as a the place to go to run a client token sale.”

Selective strategy

Going forward, CoinList detailed how future sales will be operated to ensure anti-money laundering (AML) and know-your-customer (KYC) due diligence is performed on all platform users.

While the exact rules around accreditation are slightly complicated, users must meet an income or asset threshold: at least $200,000 in annual income for an individual, or $1 million in net assets.

But while that may seem to limit the service’s clientele, Bromberg said the platform has so far processed $400 million in investments, with thousands more users joining daily.

So far, CoinList has seen three ICOs launch through its platform, Filecoin, Blockstack and Prop, and CoinList representatives said the pace of launches is perhaps unlikely to escalate in the short-term.

“It’s really a matter of being incredibly selective there,” Bromberg told CoinDesk.

Another challenge, Bromberg acknowledged, would be liquidity, especially as the cryptocurrency market cools and a fear of regulators creeps back into the community.

Bromberg, however, remained confident, concluding:

“Initially, I think we’ll be relying on our investor base to drive capital into the market and do market making … We’ll be able to offer real liquidity to a lot of these securities.”

Gold coins via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.