By
Temitope Olatunji
April 24th, 2024
The U.S. Securities and Exchange Commission (SEC) has approved the first-ever Ethereum token sale from blockchain-based gaming startup Pocketful of Quarters (PoQ).
The United States Securities and Exchange Commission (SEC) announced that they have cleared a crypto gaming company, Pocketful of Quarters (PoQ), to issue blockchain tokens without registration, regarding that the tokens aren’t qualified as securities.
PoQ CEO George Weiksner said that the token is a stablecoin, with PoQ setting the price of the Quarters as the only seller. This is part of the company’s compliance requirement with the SEC. Bear in mind that a smart contract prevents tokens from being sent to unapproved accounts, thereby restricting secondary trading.
Weiksner also went on to explain that the two-token system is meant to ensure that users conduct transactions with Quarters, rather than hold them in the hopes of securing a return. He said he hopes Quarters will improve the gaming experience for players who are tired of spending large sums for different platforms, adding:
“It’s a way to make games better.”
As said, PoQ will not use any funds from Quarters sales to build the Quarters platform, which has been fully developed and will be fully functional and operational immediately upon its launch and before any of the Quarters are sold. Also, the Quarters will be immediately usable for their intended purpose (gaming) at the time they are sold.
As per the announcement, PoQ will implement technological and contractual provisions governing the Quarters and the Quarters platform that restrict the transfer of Quarters to PoQ or to wallets on the Quarters Platform. Gamers can only transfer Quarters from their Quarters hot wallets for gameplay to addresses of developers with approved accounts or to PoQ in connection with participation in e-sports tournaments.
Capable of exchanging Quarters for the ETH will be only developers and influencers with approved accounts. In order to create an approved account, developers and influencers will be subject to KYC / AML checks at account initiation as well as on an ongoing basis.
Quarters will be made continuously available to gamers in unlimited quantities at a fixed price and there will also be a correlation between the purchase price of Quarters and the market price of accessing and interacting with participating games.
PoQ is obliged to market and sell Quarters to gamers solely for consumptive use as a means of accessing and interacting with participating games.
Lewis Cohen of DLX Law, that worked with PoQ to secure the letter said that the notable thing here is that this is the first ERC-20 public blockchain token approved for a sale.
Incredibly thrilled for @DLxLawLLP to be part of this momentous story. The SEC just provided the first-ever no-action relief for sales of a #ERC-20 token on the public #Ethereum chain. Congrats to @weiks and the Pocketful of Quarters team. Historic!! 🍾🍾https://t.co/zW6H0K9YyT
— Lewis Cohen (@NYcryptolawyer) July 25, 2019
Marco Santori, chief legal officer at Blockchain, Inc., described this move as a “quantum more permissive” comparing it to the last letter that was issued to TurnKey Jet in April. In the latter case, an airline company was permitted to sell non-transferable tokens, pegged one-to-one with the dollar, redeemable for air charter services.
Santori explains that difference lays in the fact that it is transferable to third-party developers who build on PoQ’s platform. And even though these developers will still go through know-your-customer and anti-money laundering checks before onboarding – it is still much more permissive than previous guidance. He said:
“This is the regulatory process working, and on regulatory timelines, at lightning speeds.”