A cryptocurrency reward system-based video platform, YouNow has been taking a belt-and-suspenders approach to compliance. While YouNow is not selling them to investors, accredited or otherwise, it filed for a Reg-A+ offering circular for its Props token with the Securities and Exchange Commission (SEC).
If the New York-based startup earns approval from the regulator, it can purportedly distribute Props to content creators, network transaction validators and others without registering the tokens as securities. So what is the key difference between this token and other efforts?
As per the company:
“No funds will be raised through the public offering, created to allow compliant ‘mining’ of Props in [the] US.”
YouNow will instead disperse millions of its native token to the app users. Props is an ERC-20 token that runs on the ethereum blockchain. YouNow have had raised $25 million through the sale of Props, wherein $20 million was through a simple agreement for future tokens (SAFT), which is a legal structure devised in 2017 at the time of initial coin offering (ICO) boom.
Although, 178 million Props were allocated for the current “offering” with a nominal price (13.6 cents apiece, or $24 million total). The release adds:
The Props Tokens cannot be purchased as part of this offering, but can only be earned by apps, users and validators that will contribute to the Props Network. YouNow, the first app on the network, intends to distribute a significant portion of its own tokens to millions of its users. Tokens are to be allocated to users based on their current status (“level”) on YouNow, which signifies the contribution they have made to the network to date. Upon qualification, YouNow users may earn Props Tokens by, for example, creating content on the app. Users hold Props to get in-app benefits and real upside potential.
Backed by notable names in the likes of Union Square Ventures, Comcast Ventures, and Venrock, Props plans to give the said tokens as a grant to programmers on the platform and for popular users. Venrock’s David Pakman. stated:
“Over the past two years, the team focused on launching Props in a manner compliant with US regulators and now, pending final approval by the SEC, there is the opportunity for apps to integrate and ‘mine’ a legally compliant digital token and obtain a stake, for both the apps and their users, in the network they contribute to. This visionary new model is ushering in a new era of transparent and more equitable distribution of value, and sharing that value with end-users.”