Kodak’s Not-Quite ICO to Launch May 21, As the SEC Cracks Down
As U.S. regulators crack down on initial coin offerings and debate how to regulate the burgeoning cryptocurrency space, Eastman Kodak is choosing to not choose. At least, not yet.
On Thursday, Wenn Digital, the company building the blockchain-based image rights platform KodakOne, announced that its much-delayed offering would start May 21. The company is targeting a total raise of $50 million, including about $10 million already raised from two prior pre-sale rounds.
That comes after Eastman Kodak announced plans to launch its own cryptocurrency, KodakCoin, used to pay for licensing photography. In theory, the platform would allow photographers to take back their images when needed. Initially set to ICO in January, the offering hit a roadblock when it found the need to verify accredited investors.
The method KodakOne and its partner in the fundraising efforts have chosen, however, will give the platform time to figure out whether the offering should be regulated under more rigorous securities laws. The method has been dubbed Simple Agreement for Future Tokens (SAFT), a method that gives buyers the right to a certain number of tokens at a future date.
“The Securities and Exchange Commission says every token is considered a security,” said KodakOne CEO Jan Denecke. “If you go out with a SAFT, you can still adjust to future views on how tokens are going to be considered by jurisdictions and authorities.”
The emergence of SAFT comes at a time when regulatory bodies are growing increasingly wary of ICOs. The SEC has reportedly sent down subpoenas to firms in a bid to suss out those who might be violating securities law. It’s certainly kept potential ICO-ers on their toes. Perhaps in response to this more aggressive atmosphere, ICOs stalled out in the first quarter of the year.
SAFT, was created as a way to potentially comply with securities laws that ICOs might have more trouble with. The idea, as set down by law firm Cooley, argues that tokens that are delivered only when they are “genuinely useful” with a functioning network in place, are utility tokens. The argument goes that such tokens do not give investors a stake in companies. In contrast, many ICOs have delivered tokens to their investors with just a plan of action--which should be considered security tokens.
Earlier this year, Blockchain storage network Filecoin raised some $200 million using SAFT in August and September. At the same time, two of its backers, Andreessen Horowitz and Union Square Ventures, have reportedly met with regulators in a bid to exempt ICOs that offer such utility tokens from securities law.
Still, the Wall Street Journal has reported that the SEC is, nevertheless, skeptical of SAFTs.
KodakOne says, though, it has no preference over whether it is deemed a security or a utility token (the former being partial ownership of an asset, while the latter providing buyers with access to certain services). KodakOne sees SAFT as an opportunity to determine exactly what category they might fall into.
“SAFT is not necessarily locked into exactly what the token has to be,” said KodakOne co-founder Cameron Chell. “We can figure it out over the course of the next six to nine months.”
That period is in which KodakOne is expected to go live with its own photo licensing platform.
According to Chell, KodakOne is hoping to raise a total of $50 million in its pre-sales, though it could raise more should it be deemed a security.
KodakOne says it has been in constant contact with regulators, including the SEC, during the process.