The decentralized live streaming startup YouNow, has submitted an application to the SEC for a compliant token. The Regulation A+ filing, which will go through the approval process, is an interesting development in the current uncertain regulatory landscape in the USA.
This move is certainly significant as it can create a compliant token for the platform’s over 47 million users. As such, accredited and retail users transact in compliance with US federal securities laws. Notably, YouNow does not intend to raise funds or have a public crowd sale for the tokens. Instead, the company will distribute the tokens without leveraging it for future expected profits.
The Props Project
Props is an open-source platform that aims to reward app users and content creators for activity on YouNow. The Props project has actually been in the works since 2017. Accordingly, the 47 million app users have an incentive to create content and have rewards in the form of Props tokens.
What’s different about this project is that the tokens can only go to app developers, users, and validators within the Props network. This is different from most tokens which investors can obviously purchase the tokens during the ICO. This is where the SEC normally has problems with the tokens as they could be in violation of the USA Exchange Act. Accordingly, YouNow already has an application called the Props live video app which users can create content in exchange for the tokens.
The Regulation A+ exemption is a provision within SEC regulations that YouNow intends to use to essentially prevent regulatory problems. This way, the company can distribute the 178 million Props tokens effectively and have a working blockchain network.
The exemption permits small companies to offer and sell securities to US investors in two-tiers. This has to be within a 12 month period and the company can offer shares to the general public. YouNow will rely on this exemption even though it does not intend to actually sell the tokens like shares in an Initial Public Offering.
YouNow intends to have a robust platform which benefits creators and consumers alike. The idea of using a cryptocurrency makes the network have more transparency and fluidity.
Adi Sideman, CEO of YouNow, spoke of the project to Reuters as follows:
“Those users — they may be content creators, moderators, or they may be supporting the system financially — that help grow the network can now be rewarded in a transparent and mathematical way through cryptocurrency. What we’re doing is effectively bringing utility tokens to non-accredited investors and consumers in a way that is compliant with the SEC through this public offering”
Essentially, YouNow is focusing on consumer-oriented digital media apps. The “Props apps” are similar to traditional apps-in that you can download and access them. In effect, content developers will have a great tool to hone their skills and earn from their prowess.
In the grand scheme of things, this project is an interesting indicator of where the SEC stands on crypto. This is because the SEC has recently hinted at being tougher on many platforms for conducting ICOs. The balance between nurturing innovation and imposing regulations is an equation the SEC is weighing. The decision on whether to approve this token will be a great indicator of the trajectory moving forward.