In July 2019, Blockstack’s offering for Stacks (STX) tokens became the first-ever SEC-qualified token offering in US history. Today, Blockstack PBC filed its annual report with the SEC. Such annual reports are typically the most comprehensive update that a company files as required by applicable regulations. We’re excited about the progress made since last summer and continue to work on increased decentralization of the Blockstack ecosystem.
In this post, I’ll highlight some key updates from the SEC filing along with more recent updates.
App Growth and Partnerships:
Since our SEC qualification in July 2019, we’ve successfully distributed STX to 4,500+ participants of token offerings, and we’ve forged strategic partnerships in Asia with investors like Recruit (Japanese internet giant), HashKey Group, SNZ, Fenbushi, and others. Apps built on the network grew from 114 in July 2019 to more than 400 now. We partnered with Blockchain.com to distribute STX to 300K owners and integrated Blockstack login with FireChat. Our community continues to grow on Discord, Telegram, and meetups. It’s always great to see our community use Blockstack apps like Blocksurvey, Dmails, Sigle, NoteRiot, Mumble, and others to stay in touch and collaborate.
Securities Status:
The Stacks (STX) Token is a utility token that is used as fuel to register digital assets like usernames, domain names, in-app assets, etc., and is designed to execute Clarity smart contracts in the Stacks 2.0 blockchain. Although we currently treat Stacks as securities in the US to comply with US securities regulations, the board of Blockstack PBC will periodically consider if the Blockstack network is decentralized enough for Stacks to be treated as non-security in the US.
We believe that STX offer a unique level of transparency as the only crypto asset on CoinMarketCap that files annual reports with the SEC because of our commitment to regulatory compliance. These regulatory filings enable users of blockchains and decentralized apps to get detailed information on Blockstack. We think the level of transparency and information sharing by Blockstack is at a much higher level compared to norms in the crypto industry; no other project listed on CoinMarketCap (CMC Top-100) does SEC filings and releases audited financials.
Exchanges & Wallets:
Stacks already trade in certain non-US jurisdictions and are integrated on international exchanges like Binance and institutional exchanges like HashKey Pro. There are no US exchanges that list Stacks for trading yet. Last week, we announced a listing agreement with Asia-based crypto exchange KuCoin to further expand global access to the Stacks (STX) token in the near future.
In June 2019, we provided an update to the Stacks Wallet with an open-source foundation enabling the Blockstack community to also build wallets of their own. The Stacks Wallet is now compatible with Trezor One, Ledger Nano S and Ledger Blue. Further, Blockchain.com integrated Stacks to the Blockchain Wallet as part of a distribution of Stacks to 300K users. For Stacks 2.0 we have a wallet SDK that makes it easier for exchanges and wallet providers to integrate Stacks.
Audited Financials:
Blockstack PBC raised approximately $23 million in cash and cryptocurrencies in 2019 through the SEC-qualified token offering and strategic Asia round. Unlike equity fundraising, we treat funds raised through token offerings as “revenue” and pay taxes on them.
As of December 31, 2019, we had $18.6 million in cash, of which $4.4 million was restricted. As of December 31, 2019, we had cryptocurrency reserves of $7.8 million, of which $2.4 million was restricted. As of January 2020, the restricted cash and cryptocurrencies are no longer subject to any contingencies and are available for use by Blockstack PBC. We also have a short-term treasury of 293M STX and a long-term treasury of 110M STX.
Dissolution of Blockstack Token Funds:
As part of our 2017 offering for Stacks Tokens, we setup two Delaware funds–namely, Blockstack Token Fund QP and Blockstack Token Fund AI. Institutional investors and accredited investors became limited partners (LPs) in these funds. These funds have now served their purpose and they have been dissolved; STX for these investors were distributed to the LPs in Nov 2018, and Blockstack PBC met all milestones that were defined in the respective LP agreements.
We thank the LPs for their original investment and support in 2017 when the Stacks blockchain was just an idea in R&D stage. Their investment enabled us to develop the Stacks 1.0 blockchain and create and distribute Stacks Tokens to them. We not only delivered on the original blockchain design but worked on a “master design” for Stacks 2.0 blockchain which represents a major improvement to the 1.0 design. Our testnet for Stacks 2.0 went live last week!
Team Growth:
I’m extremely proud of the team we’ve built at Blockstack PBC. The SEC filing includes biographies of executive officers and some team members. We offer employees restricted token units (RTUs) and stock options in addition to cash compensation. The RTUs are the framework for STX grants for employees. Both the RTUs and stock options have a standard 1-year cliff and 4-year vesting for employees. The Blockstack team includes leaders from companies like Dropbox and BlackRock and computer scientists from universities like Princeton, Stanford, and MIT. Blockstack PBC had 27 full-time employees by Dec 31, 2019. Since then Blockstack PBC team has grown to 32 full-time employees and we’ve started a European subsidiary with an office in Amsterdam. We’re actively hiring!
The Blockstack ecosystem has made a lot of progress since the summer of 2019. The Stacks 2.0 blockchain mainnet launch by independent miners and the framework for increased decentralization is our main focus in the coming months.
The full Blockstack PBC SEC annual report for the fiscal year ending Dec 31, 2019, is available here. For any questions, you can join our public community call on Fri May 1st at 10am EST.
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Important disclaimer
Blockstack PBC is not registered, licensed, or supervised as a broker dealer or investment adviser by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), or any other financial regulatory authority or licensed to provide any financial advice or services.
Forward-looking statements
This communication contains forward-looking statements that are based on our beliefs and assumptions and on information currently available to us. In some cases, you can identify forward-looking statements by the following words: “will,” “expect,” “would,” “intend,” “believe,” or other comparable terminology. These statements involve risks, uncertainties, assumptions, and other factors that may cause actual results or performance to be materially different. We cannot assure you that the forward-looking statements will prove to be accurate. These forward-looking statements speak only as of the date hereof. We disclaim any obligation to update these forward-looking statements.