The much anticipated Filecoin token offering has gathered some $52m (£39.9m) of investments from Silicon Valley heavyweights ahead of the start of the sale on Thursday 10 August.
Filecoin, which will be used to power a large decentralised file storage system linked to the iconic IPFS protocol, is unique within the ICO space because it ticks a bunch of regulatory boxes with US regulator the SEC.
Filecoin is also the first ICO to take place on CoinList, the ICO platform developed by Protocol Labs and AngelList to be compliant with the SEC. Filecoin's ICO will demonstrate the use of SAFT (Simple Agreement for Future Tokens) under SEC Reg. D, 506(c).
The whole thing is SEC compliant because only accredited investors can take part in the token sale; this means banks and recognised investment institutions, or high net worth individuals (HNWIs) with $200,000 to invest. It also sidesteps a major point of contention around ICOs, which sell tokens in systems that are yet to be built. Filecoins will not be distributed until after minimum of six months has passed (another box tick according to the SEC's exemption Rule 144), and those who hold off for longer are rewarded.
Unsurprisingly, some very astute lawyers are closely following the ICO space. Speaking about the Filcoin ICO, Stephen Palley, a lawyer in the Washington D.C. office of Anderson Kill, said: "Can you comply with securities laws and raise significant amount of money selling tokens? Maybe so.
"The fact Filecoin has pre-sold $52 million to the likes of Sequoia and Union Square Ventures demonstrates the depth of interest in coin-based investments in the VC community.
"If Filecoin is able to successfully raise additional funds with an SEC compliant offering on CoinList that may be something of a turning point in the use of token sales for funding. It suggests that token sales may be something more than a way to raise large sums of money by skirting regulations.
"Another distinguishing factor is that Filecoin is more than 'a whitepaper and a dog' as one twitter wag has described some ICOs. IPFS is an established and (in my view) useful technology and the tokens will provide access to something that has current and existing utility. Time will tell if it's a wise investment or sound technology.
"From a US legal standpoint, they appear to have taken pains to be compliant. Those efforts have so far not impeded their ability to raise a significant amount of money."
To read the full story: Filecoin laments shutting out crypto supporters to meet SEC regulations