SEC Won’t Take Action Against Blockchain Gaming Firm PoQ
Last updated on November 1st, 2022 at 04:55 pm
Across all reaches of the globe, varying levels of cryptocurrency regulations are being issued by governments and governing financial bodies.
In recent months, the US Securities and Exchange Commission (SEC) has become rather infamous when it comes to their statements on and actions against crypto-based companies and their business practices.
So far, the SEC only allowed one token seller to proceed with their actions, without making a move against the firm. Yesterday however, the regulatory body finally allowed another firm to do the same.
The second crypto company ever that the SEC has issued a no-action notice against is a gaming rewards firm known as Pocketful of Quarters (PoQ). The SEC’s FinHub chief legal officer, Jonathan Ingram, stated that the Division has decided not to recommend enforcing action to the Commission, based on the presented facts.
The decision is very significant for the company, but many also believe that it represents a big victory for the entire US crypto industry and frankly, a major step in the right direction.
PoQ allows gamers to purchase digital tokens via Ethereum (ETH), as well as USD.
The tokens — Quarters — are transferable between various games and users do not have to cash out if they wish to stop playing their current game. Everything they win as part of their gaming sessions can go with them.
PoQ Receives Firm Rules
This was only the opening hurdle for the blockchain start-up. Though their token was proclaimed ‘not-a-security’, the SEC has set forth rules and guidelines that they will have to adhere to in order to keep that status.
Rules will include subjecting players, influencers and developers to KYC and AML procedures… their token Quarters will have to be constantly available in unlimited quantities and have a fixed price… funds gathered from the token sales cannot be used to create their platform… and finally, the firm will market and sell their tokens to gamers for the sole purpose of playing their games.
Despite the significance of the move, many in the crypto space do not seem particularly thrilled by the new development. The chief legal officer of crypto wallet company, Blockchain, Marco Santori, comment on Twitter.
Santori feels that the fact that the crypto world achieved a no-action letter against arcade tokens is not something that should be celebrated.
He is not alone in this sentiment.
Blockchain specializing lawyer, Stephen Palley, appears to be feeling the same.
An Emerging Pattern
As mentioned earlier, this was the second case that the SEC decided not to take action against a crypto firm. The first was in March of this year, when the regulator decided not to move against a US-headquartered business travel firm, TurnKey Jet.
Since this no action letter, the company is now legally allowed to sell its token. TurnKey Jet has to abide by pretty much the same set of rules as PoQ.
The SEC appears to be most keen at enforcing the rules that the tokens must have a fixed price, that the tokens cannot be used outside of the platform and that the token sellers cannot use the funds for further developing their platforms
With this in mind, it is likely that more blockchain based firms may start developing their platforms so to abide by these rules. For true utility tokens, the benefits are obvious… time will tell what other companies may be seeking this same approval.
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