Crypto VC firm a16z released a post last night proposing 5 major suggestions for token issuance, including not selling tokens publicly in the US for fundraising purposes and making decentralization the direction in order to avoid potential regulatory risks with the US SEC.
(Table of Contents:
a16z: Web3 practitioners have the responsibility to self-manage
5 major suggestions for token issuance
a16z CTO: Meme coins are undermining the long-term vision of cryptocurrencies
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(Summary:
Largest Web3 VC: a16z announces new $7.2 billion fundraising, targeting which areas?
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(Background:
Largest Web3 VC Fund: a16z rumored to raise another $6.9 billion, focusing on AI and gaming sectors
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Article:
a16z, the world’s largest Web3 venture capital firm, released a lengthy post last night, stating that the relationship between blockchain builders and the US regulatory agency SEC seems overly tense, but in reality, both have the same goal of creating a fair and competitive Web3 environment.
In response to this, a16z put forward 5 major suggestions for token issuance to help blockchain companies improve self-management and avoid potential regulatory risks with the US SEC.
a16z: Web3 practitioners have the responsibility to self-manage
a16z first stated that the divergence between the US SEC and blockchain builders lies in their response to the same challenge from completely different perspectives:
The reason why blockchain practitioners face rejection from regulatory agencies is that blockchain companies completely exclude the SEC from their work and insist on their own path. a16z proposes:
5 major suggestions for token issuance
In response to this, a16z has proposed 5 major suggestions for blockchain companies in token issuance to facilitate self-management of projects:
1. Do not sell tokens publicly in the US for fundraising purposes
a16z cited the ICO frenzy in 2017 as an example, pointing out that selling tokens in the US for fundraising purposes does indeed fall under US securities laws, and project teams need to avoid doing so.
2. Make decentralization the direction
a16z further pointed out that token issuers can adopt different strategies for token issuance, such as appropriately splitting their projects before launch, starting in jurisdictions outside the US, or restricting token transferability to prevent entry into the secondary market in the US.
3. Communication is everything, while engaging in self-management
Project teams should establish strict communication policies based on their different token issuance strategies.
4. Exercise caution when listing on the secondary market while paying attention to liquidity
a16z stated that listing tokens on the secondary market may bring greater uncertainty to price fluctuations while gaining greater liquidity, and investors are likely to be the ones who ultimately suffer losses.
5. Ensure that tokens are locked for at least one year from the date of token issuance
SEC has previously prevented token issuers from issuing tokens because project teams did not meet the lock-up period requirements for tokens. Therefore, a16z suggests that project teams should implement token transfer restrictions on any individuals or organizations involved in token distribution.
a16z CTO: Meme coins are undermining the long-term vision of cryptocurrencies
On the other hand, Eddy Lazzarin, the CTO of a16z, recently expressed a negative view on the meme coin trend that has been highly popular among investors this year, stating that meme coins are undermining the long-term vision of cryptocurrencies.
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