It is confusing for non-US STOs to know how to properly access US investors and to involve US members to be active participants in the Token/Coin community to build a strong presence in the US market. Manhattan Street Capital is the leader in solving these problems for client companies.
We help Non-US companies make their STOs work properly with the US SEC regulations.
What we do for you;
- We bring in our blockchain enthusiast US securities attorneys that are experts in STOs and the SEC regulations, and that are cost-effective.
- We are expert on how to make your token offering in the US within the US SEC regulations and how to be successful doing this.
- We help you how to make your STO work well outside the USA and inside the US.
- We help you raise capital on our investing platform - we collect KYC information, conduct AML check and Accredited investor verification automatically and we use our proprietary algorithms to do more investor quality checking.
- Our investment platform enables you to accept all popular cryptocurrencies, as well as US $ investments via wire, check, Debit card and ACH (direct bank transfer)
- We bring in marketing agencies when they are needed and we help you direct and manage them for maximum cost-effectiveness of your capital raise.
- We are leading experts in Reg A+, Reg D and Reg S.
- Our STO consulting service provides important guidance from the start to after the end of the capital raising process.
- We help you make air-drops and we show you how to do them so they are within the SEC regulations.
STOs (Securities Token Offerings)
In early August of 2017 the SEC made it clear that in most cases Initial Coin Offerings are considered by the SEC to be securities transactions, so the existing body of SEC regulations apply fully to them.
There are three primary SEC Regulations that are well suited to raising capital through the sale of securities to investors online. They are Reg D 506C, Reg S and Regulation A+. These rule systems are used widely and are well understood. Either one of them can be used with STOs, as long as the STOs are carefully developed with compliance to these rules built in.
Regulation A+ has many advantages (its good for liquidity and IPOs, no accredited investor requirement), but non-US companies must set up a US (or Canadian) company to make a Reg A+. So most non-US STOs companies that we work with use Reg D, often with Reg S.
The SEC allows non-US companies to use Reg D for US investors while raising capital from investors outside the US via other rule systems - for example, the regulations of Singapore, Switzerland or Hong Kong.
The SEC also allows non-US companies to raise capital outside the USA using Reg S while raising US investor capital via Reg D.
With a Reg D (506c) offering, the company can raise an unlimited amount of capital, but only from accredited investors. It is allowed for the issuing companies to promote and advertise their offerings. The issuer companies have to take steps to verify that the investors are actually accredited. Although the companies don't need to register with the SEC, they have to file a Form D, which includes information about the company's offering, promotors, the companies themselves, and some further information about the offerings.
Regulation D provides a great opportunity for international STO companies to enter the US market and raise money from US accredited investors. Reg D 506C allows crowdfunding funding platforms (like Manhattan Street Capital) to assist companies by listing their STOs. We also assist client companies to make their STO work outside and inside the US within the regulations and help them to succeed.
Features of a Reg D STO
Companies can use the usual Smart Contracts
Can use a convertible note to raise capital before the Tokens exist. In the convertible note offering, the issuer company is allowed to use discount-steps to reward early investors. Subsequently, the notes are converted into investments in Tokens through the Reg D.
Generally no fixed cap on how much capital can be raised.
Only accredited US investors are allowed to invest, non-US investors are not required to be accredited via Reg S.
The offering company has to take reasonable steps to verify that its Reg D investors are accredited. The Accreditation Verifications and AML checks are done by Manhattan Street Capital as an automatic part of our investment process.
The Reg D Form D must be filed with the SEC, but this is a simple filing, not a lengthy process - a few days to file.
The Tokens bought by investors are not liquid and can only be sold to accredited investors after the one year holding period has passed, unless a liquidity event such as an IPO or a Reg A+ occurs. These restrictions must be built into the tokens and smart contract.
Note that implementing an STO so that it conforms to Regulation D can be complex and must be approached in a thorough manner with advice from expert securities attorneys who we work with closely and introduce to you.
Regulation S (Reg S);
- Non-US investors are not required to be accredited
- Can be combined with Reg D for US investors, so the non-US investors invest through Reg S
- A natural complement for Reg D