The United States Securities and Exchanges Commission (SEC) on July 25 cleared crypto gaming startup, Pocketful of Quarters (PoQ) to issue blockchain-based tokens without registration.
The approval which is one in a few exemption cases by the SEC specifies that the startup’s plan to issue ‘Quarters’ tokens to users on its gaming platform does not constitute a securities sales under U.S laws.
To shed more light on the reasons why the SEC would not pursue an enforcement action against Pocketful of Quarters (PoQ), Jonathan Ingram, the chief legal advisor of the SEC’s FinHub division outlined some of these facts:
PoQ will not use funds realized from Quarters sales to develop their platform, and will only begin selling their tokens after the platform becomes fully operational.
PoQ will use smart contracts to govern the Quarters and the Quarters Platform, in a way that restricts the transfer of Quarters to PoQ or wallets on the Quarters Platform.
Gamers will only be able to transfer Quarters from their Quarters Hot Wallets for gameplay to addresses of Developers with Approved Accounts or PoQ in connection with participation in e-sports tournaments.
Approved users on the platform must complete KYC/AML checks at account initiation as well as on an ongoing basis.
Quarters will at all times be made available to gamers in unlimited quantities at a fixed price.
there will be a correlation between the purchase price of Quarters and the market price of accessing and interacting with Participating Games; and
The company will market and distribute Quarters to gamers solely for consumptive use as a means of accessing and interacting with Participating Games.
Interestingly, the SEC’s clearance of Pocketful of Quarters (PoQ) allows the company co-founded by 12-year-old CEO, George B. Weiksner to become one of the few projects the skirt an otherwise stringent regulation of crypto startups in the U.S.