Introduction:
The world of Web3 projects and cryptocurrencies operates within a complex regulatory landscape, especially when it comes to the Securities and Exchange Commission (SEC) in the United States. In this comprehensive blog, we delve into the challenges faced by existing crypto projects seeking SEC registration, the lessons learned from past attempts, and Ohanae's innovative approach to compliance in the evolving Web3 landscape.
Existing Challenges with SEC Registration:
One of the primary challenges in the current SEC registration process is that it does not adequately address the unique aspects of crypto assets. The disclosures and regulations associated with traditional securities offerings are often ill-suited for the innovative nature of most crypto protocols. Consequently, complying with the existing framework becomes impractical and hinders the functioning of these projects. The enforcement actions by the SEC during the ICO era serve as a testament to the difficulties faced by projects attempting to register their tokens. Many of these projects ultimately ceased operations and failed to gain substantial utility or market presence despite their registration efforts.
Lessons from Failed Registration Attempts:
It is important to understand that the role of the SEC is not to act as a "merit regulator" determining which projects are investable. The securities laws in the United States are designed to ensure transparency and protect investors by requiring adequate disclosure. However, the registration process for tokens under the 1933 and 1934 Acts is a complex and ongoing endeavor. It involves continuous reporting, compliance with numerous regulations, and limitations on trading venues. Additionally, the lack of infrastructure for trading registered tokens poses significant challenges to the operation and liquidity of most crypto projects.
The Ohanae Way: A Future Path for Web3 Projects:
Ohanae recognizes these challenges and has emerged as a leading force in developing a compliant and functional market for digital asset securities. Through its innovative OTC Market Platform, Ohanae offers a fresh approach to token offerings by leveraging Regulation A+ under the 1933 Act. This regulatory framework allows companies to conduct "mini-IPOs" that comply with disclosure and reporting requirements while offering regulated token distributions. Ohanae emphasizes the importance of careful planning and expert legal guidance to ensure the proper structure and separation of equity securities from Web3 projects.
Key Components of Ohanae's OTC Market Platform:
Ohanae's OTC Market Platform comprises several key components that work together seamlessly to create a robust and compliant ecosystem for digital asset securities:
- Ohanae Blockchain: The platform operates on a secure and compliant permissioned blockchain, prioritizing transparency and reducing the risk of fraudulent activities. The blockchain infrastructure ensures the integrity of transactions and maintains a trusted environment for seamless operations.
- Ohanae Coin ("OUSD"): Ohanae introduces a tokenized commercial bank currency called OUSD. Designed to be pegged to the US dollar, OUSD offers stability and familiarity for investors, making trading hassle-free and reducing the volatility typically associated with cryptocurrencies.
- Equity Tokens ("OHANA"): Ohanae pioneers the use of equity tokens, which digitally represent traditional securities. These innovative tokens open up new investment opportunities and provide investors with exposure to the potential growth of Web3 projects.
- Secure Custody Solutions: Ohanae prioritizes the security of investors' assets with top-notch secure custody solutions. These solutions protect private keys from unauthorized access, ensuring the safety and integrity of digital assets.
- Atomic Settlement: Ohanae's revolutionary instant settlement mechanism eliminates settlement risks by enabling the simultaneous settlement of multiple assets. This innovative approach ensures efficient and reliable transactions, further enhancing investor confidence.
- Automated Market Maker (AMM): Ohanae's state-of-the-art AMM technology provides liquidity and enables direct trading on the platform. The AMM mechanism enhances market efficiency and accessibility for investors, facilitating seamless trading experiences.
- Digital Transfer Agent: Ohanae streamlines ownership transfers and promotes transparency through its digital transfer agent. This feature simplifies processes and ensures compliance with regulatory requirements, enhancing the overall efficiency of the platform.
- Reg A+ Exemption: Ohanae embraces the Reg A+ exemption provided by the JOBS Act, which democratizes access to investment opportunities and makes them available to the general public. This exemption fosters inclusivity and broadens participation in the OTC securities market.
- Investor Acquisition Marketing (IAM): Ohanae offers an innovative Investor Acquisition Marketing program that empowers capital seekers to generate leads, expand their networks, and build vibrant communities around their offerings. This program enhances visibility, engagement, and investor participation.
- Revenue Drivers: Ohanae has identified various revenue streams that support the platform's sustainability. These include success fees, listing fees, digital transfer agent fees, and value-added services. The diversified revenue model ensures the long-term viability of the platform, driving its continued growth and development.
Embracing Ohanae's Vision:
Ohanae's vision is centered around redefining OTC securities with confidence. By addressing industry pain points through security, transparency, and compliance, Ohanae aims to foster trust and empower investors. Through its emphasis on tokenization, equity crowdfunding, non-stop trading, and atomic settlement, Ohanae is reshaping the future of OTC securities in the evolving Web3 landscape.
Confidence. That's Ohanae.
Disclaimer
Ohanae Securities LLC is a subsidiary of Ohanae, Inc. and member of FINRA/SIPC. Additional information about Ohanae Securities LLC can be found on BrokerCheck. Ohanae Securities LLC is in discussions with FINRA about exploring the expansion of business lines for the broker/dealer. Any statements regarding abilities of Ohanae Securities LLC are subject to FINRA approval and there are no guarantees FINRA will approve the broker/dealer’s expansion.
Ohanae Securities is seeking approval to be a special purpose broker-dealer that is performing the full set of broker-dealer functions with respect to digital asset securities – including maintaining custody of these assets – in a manner that addresses the unique attributes of digital asset securities and minimizes risk to investors and other market participants. If approved, Ohanae Securities will limit its business to digital asset securities to isolate risk and having policies and procedures to, among other things, assess a given digital asset security’s distributed ledger technology and protect the private keys necessary to transfer the digital asset security.