Entrepreneurs are starting to doubt that crypto tokens can be used at all in the U.S.
In fact, according to Simar Managt, the co-founder of distributed video streaming startup Stream, the current environment of regulatory uncertainty and rumors of subpoenas is putting such a pinch on projects that many are thinking about “moving elsewhere.”
But, while that hasn’t happened yet for the Silicon Valley-incubated startup, the threat of regulator action is leading it to overhaul its product roll-out – drastically. Announced Tuesday, Stream is releasing a white paper that outlines its token distribution, but the process is on hold until the team knows how U.S. regulators will permit its tokens to be used.
Launched in October, Stream had planned to give live-streamers, vloggers and online video makers a way to break platform lock-in by building a Chrome extension that allowed fans to tip creators wherever a video appeared, but the firm says its whole project has now been thrown into question.
“If there were a path of how to do things right, that would be so much better.”
The problem for Stream is that its strategy relies heavily on using a so-called “utility token” to fuel a distributed network. Not only that, but the ability of tokens to be distributed and traded easily and converted to fiat currency made them ideal for Stream’s business plan.
And this fitted with general industry thinking until very recently.
In 2017, startups generally believed that a utility token would be good to issue so long as the platform went live eventually. Even then, many doubted that they could be sold prior to a platform launch to non-accredited investors, but startups have begun canceling public sales amid the uncertainty.
Now, Stream’s counsel is questioning if any tokens at all can be circulated in the U.S. without the full know-your-customer (KYC) and anti-money laundering (AML) registration of anyone that holds them, or if stream tokens must now be registered as securities.
Spanner in the works