Wyoming firm seeks SEC nod for blockchain-based DAO status
18:59, 20 September 2021
American CryptoFed DAO is attempting to register two new digital tokens as publicly traded stablecoins and is currently awaiting regulatory approval, the exchange announced.
If approved by the Securities and Exchange Commission (SEC), CryptoFed will become the first legally recognised and publicly traded decentralised autonomous organisation (DAO). No underwriters are named in connection with the offering.
“We are not about making money. We are trying to start an economy not based on credit,” said CryptoFed CEO Marian Orr in an interview with Capital.com. “An economic system that’s not based on 2% inflation.”
Orr likened the CryptoFed more to a co-operative, calling it “Pluralism, not Capitalism.”
Orr, the former Mayor of Cheyenne, Wyo., “come(s) at this from a political background, not a Crypto background,” she added. “Municipalities are losing 1% to 3% on transaction fees,” she added.
The company is requesting the SEC approve the tokens, Ducat and Locke, as utility tokens traded over the CryptoFed blockchain as opposed to securities, the company stated in a news release.
Ducat and Locke
Ducat is defined in the Form 10 as “an inflation and deflation protected stable token with unlimited issuance, constrained by algorithms targeting zero inflation and zero deflation.”
Locke is defined as “a governance token with a maximum authorised finite number of 10 trillion” and is “used to stabilise Ducat and for Locke holders to participate in network rule-making and decision making.”
The Ducat is pegged to the US Dollar and will appreciate by the Personal Consumption Expenditures Price Index, as reported by the US Department of Commerce. “This ensures Ducat does not experience inflation,” the Form 10 states. “As long as goods and services are priced in Ducat and the target equilibrium exchange rate is maintained, the inflation and deflation of Ducat should remain close to zero.
New monetary system
American CryptoFed, launched in July by mSHIF, intends to “create and maintain a monetary system with zero inflation, zero deflation and zero transaction costs,” the company said in its Form 10 filed with the SEC.
"To become a truly decentralised autonomous organisation, we intend to widely distribute a percentage of CryptoFed's Locke governance tokens, free of charge, to contributors, including municipalities, merchants, banks, crypto exchanges, and individuals who will participate in the CryptoFed Ducat Economic Zone,” American CryptoFed CEO Marian Orr said.
CryptoFed will act as a central bank, managing the token supply to maintain its inflation targets.
“CryptoFed will conduct open-market operations on a daily basis which will change the supply of Locke and Ducat tokens over time,” the company reported. “Locke and Ducat transactions will be fully transparent on the CryptoFed blockchain.”
CryptoFed hopes to work with the SEC on how to best report these transactions.
New form of business
In a recent interview with Wyoming Public Radio, Orr described DAO’s as “a new form of business organisation,” describing the structure as “very similar to a LLC, but it's different in that it uses blockchain technology, which is super secure and very quick.”
“This is a new structure where really anybody that is a participant in the token economy, in this case, holds that token economy, is considered a member of the organisation and has voting rights,” Orr continued. “If changes in protocols or any kind of change within the system needs to be made, it can go out instantaneously to the members, so that members can vote."
While awaiting SEC approval, CryptoFed will allocate its Locke tokens to the contributors in its Ducat Economic Zone,” the company’s S-1 shelf filing added.
“In the interim, Form S-8 filing will enable CryptoFed to grant restricted and untradeable Locke tokens to more than 500 persons,” the exchange said. “For clarity, all Locke and Ducat tokens will remain restricted, untradeable and non-transferable until the effectiveness of the Form S-1 filing is confirmed by the SEC.”
Even without SEC approval of the S-1 shelf, the Form 10 becomes effective in 60 days. CryptoFed plans to file two 8_k forms with the SEC on 15 November and 31 December, the company added.
Wyoming first DAO-friendly state
In April, Wyoming passed Senate Bill 38, making it the first – and currently only – US State to recognise decentralised autonomous organisations as limited liability companies. The law was signed by Governor Mark Gordon and went into effect on 1 July.
On 5 August, the State of Wyoming approved CryptoFed as a legal entity.
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