The Appcoin Debate
Over the past few months, around $250m has been raised by a few companies in the blockchain space. However, none of that has been via the traditional VC funding model. Instead, these entities have raised money by creating their own ‘appcoins’ through a crowdfunding sale on a blockchain.
Old school Bitcoiners might not be all that alarmed by this, mainly because they’ll remember the Bitcoin 2.0 days when a new altcoin was released daily. If you don’t, the altcoin cycle went something like this: release altcoin, publicise it on Reddit, pump it, then dump it and start again.
Some take the view that appcoins are a new way for companies to bootstrap - getting funding Kickstarter-style for their venture as 'equity’ in the entity/project/hobby. While others (me included) take the view that a number of these companies are issuing securities in breach of securities law in some jurisdictions.
I’m all for experimentation, however, there are good reasons the law carves out certain types of financial instruments as requiring formal disclosures and/or regulatory clearances before they can be hawked to retail investors. Generally, this is to protect market integrity and consumers from fraudsters. Given some of the recent appcoin 'issuances’ this reasoning seems to ring truer than ever.
This week I’ve included some articles on the the appcoin debate - let me know what you think.
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