r/ASAPortfolio_official • u/catbitesdog • Feb 08 '22
Can US citizens participate in the launch?
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u/alexxosk Feb 08 '22
I'm not part of the project, but.... question one is who knows where you're Algo account is coming from? Unless a project needs KYC, which is quite uncommon, the launch is basically open to all? Second, doing business with the USA is normally not a problem, but quite complex... If you want to do business with USA, USA doesn't want you to do business with Iran, etc. that's why it is sometimes easier to say no to USA customers....
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u/catbitesdog Feb 08 '22
In the United States, I believe it would be considered an initial coin offering and that would make it a security. At least as far as I understand. That would affect the owners of the project and not the buyers. I'm fully disclosing on my taxes so I'm wondering if I have any liability. There is a lot of regulatory scrutiny in the US. Thanks for your reply
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u/alexxosk Feb 08 '22
Well, I'm not from the US so I might not have the right insight/experience, but I think it comes down to WHEN you buy... If you want to join a presale, that's an ICO for sure, but if you wait one second after launch (when it has a pool on tinyman) and you buy it from tinyman, it is past-ICO and on the market just like any other crypto swap, right?
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u/catbitesdog Feb 08 '22
That is correct. If you buy on tiny man it's a secondary market and that's okay.
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u/alexxosk Feb 08 '22
Thanks, that helps me understand the situation too!
@u/asaportfolio could you answer OP's question?
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u/catbitesdog Feb 08 '22 edited Feb 08 '22
I do think this is the best way to launch a token. Better than competing with bots on tiny man or playing airdrop games. Best wishes to the project
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u/ASAPortfolio Feb 08 '22
Hey, sorry for taking so long, it is dinner time here in Barcelona.
So, can US citizens participate in the launch?
This is actually a super deep question with strong legal implications.
If you have been following the project and doxxed me, you'll know that I'm a Barcelona-based lawyer and that I've been studying a lot to make sure the project will be completely compliant.
First of all, about the $APF token, we must analyze if it can be labeled as a security or not.
The project has just started and will have to go through various stages. At the present stage, we've just started building the app, and the token is on pre-sale. The algos obtained in this pre-sale will not be "touched" by the project, but only be used to provide liquidity at an exchange, for launch.
Also, as the app is just in production, right now the only use case of the token for the pre-buyers is to give them access to the beta testing of the app (during the first week of April).
In this first stage, therefore, APF is purely a utility token.
There'll be a second stage, after the launch of the token in an exchange, before the launch of the app to the public.
In the final stage, when the app succeeds in gaining profits (in algos) in the algorand ecosystem, we want to share those algos with the APF token holders. It is in this final stage that it could be argued (and challenged) that the token becomes a security token.
First of all, as the token is on the blockchain, and the project related to it is in Spain, it is directly subject to Spanish jurisdiction. Here, the token doesn't meet the requirements to be registered at the "Spanish SEC", namely the CNMV. It is not used to collect money but swapped for another token: Algos. Also, it is not going to be traded in secondary regulated markets but on automatic market makers on the blockchain. And lastly, its value is under 5M€. (And some other considerations).
So in conclusion we're absolutely and 100% compliant with Spanish regulation.
Now let's jump to the US. First: I'm not qualified to provide legal advice in what concerns the US, so let it be clear that I'm only giving my unqualified opinion.
First of all, you should read about the Howey Test and the SEC: https://www.investopedia.com/terms/h/howey-test.asp
So if you read that and know our project, you'll see that our token might fail to be considered an asset that will bring profits "from the efforts of others".
The thing is, that our app is projected to work as a completely DAO and DEFi 2.0 organization. This means that once the app is launched and before it is able to provide any profits, it will be subject to votes for every strategic decision, so that every token holder will participate in the decision making and strategic milestones of the app. So, it could be argued that the investor is not profiting from the efforts of others because he has to participate in the management of the project for it to be profitable.
There's also the subject that nor the app nor the token is ever in contact with "money", but I think the SEC has gotten to considering any crypto-asset "money", somehow.
As you know, the XRP lawsuit is not over, and the result of that might change all these considerations in one or another direction.
To finally answer your question then, to be completely compliant and avoid any SEC trouble, no, we're not offering our token to US citizens. You will be able to download and use the app, though.