Launching a security token is a regulated activity. In the US and many other jurisdictions the rules are available from the market authorities. Brickken targets the companies that aim to raise less than $5M, even though they don't specifically mention it, their technology is built around self-distribution in a non-custodial way which is different from Tokeny, or Securitize.
In the US, the rules are Reg CS and Reg 506, etc. Reg CS exemption.
The rules:
- ** require all transactions under Regulation Crowdfunding to take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal**
- permit a company to raise a maximum aggregate amount of $5 million through crowdfunding offerings in a 12-month period
- limit the amount individual non-accredited investors can invest across all crowdfunding offerings in a 12-month period and
- require disclosure of information in filings with the Commission and to investors and the intermediary facilitating the offering
Meanwhile, there is also the Reg 506 rules
Given that the CS rules require a broker-dealer platform to handle the sale, I'm guessing they are using the 506 rules instead, or is that 506 rule also require broker-dealer?
I'm personally still unclear wether or not it is allowed to do a self-distribution or not. I was assured by my lawyer that it is possible to do so, but I'm getting conflicting information while reading the rules in the US. Other jurisdiction may be more relaxed, but in either case even if you use Brickken's technologies you need to hire the service of a lawyer to do things properly. I would love to get clarification on the matter, and I will update my review at that point. If self-issuance is indeed possible, then I don't know any other provider beside Brickken in which case the value of the service is great for smaller web3 raise, but larger raise above $5M would still require using other platforms. Show Less
