Wyoming-based decentralized autonomous organization [DAO], CryptoFed has made an announcement regarding its recent filing. The DAO filed two forms with the United States Securities and Exchange Commission [SEC] to launch two versions of its interdependent stablecoins, Locke and Ducat. As per the press release shared by CryptoFed, the tokens were awaiting their registration as utility tokens issued on the CryptoFed blockchain.
Regarding its filing of Form 10 and Form S-1, the DAO explained in its statement,
“While Form S-1 will not become effective until SEC’s declaration, Form 10 becomes effective automatically in 60 days subjecting CryptoFed to SEC’s periodic reporting requirements and making CryptoFed the first legally recognized DAO in the USA as well as the first public DAO in the world.”
Meanwhile, irrespective of SEC’s comments, CryptoFED will automatically be recognized as a DAO in the United States after 60 days from the initial filing date.
The filing suggested its Ducat token was an inflation-and-deflation-protected stablecoin, that can be used for day-to-day transactions as well as a SoV [store-of-value]. Meanwhile, Locke is a governance token that will be used for stabilizing Ducat and forming rules for the ecosystem. The CEO of CryptoFed, Marian Orr noted the Locke will make its way to municipalities, merchants, banks, crypto exchanges, and other participants in the DAO. She added,
“The CryptoFed uses the part and parcel of buying and selling between Locke and Ducat to stabilize Ducat through ongoing open market operations similar to those of the Fed.”
The organization is hoping to make the tokens tradable and transferable for which it had filed the Form S-1. Until Form S-1 is approved, the stablecoins will remain restricted, untradeable, and non-transferable.
The CEO clarified,
“We explain in our Form 10 filing, Item 1 Business, Section 2.9 Locke and Ducat as Utility Tokens, why Locke and Ducat are utility tokens, not securities. However, if SEC classifies Locke and Ducat tokens as securities, our intent is to file Form S-8 after our Form 10 filing takes effect, but before SEC declares our Form S-1 filing effective.”
She further stated that the DAO will then be able to “continue granting restricted and untradeable Locke tokens, free of charge, to contributors according to the CryptoFed Equity Incentive Plan as defined by the CryptoFed Constitution.”
It is important to note here, that in the recent past, SEC chair Gary Gensler advised crypto projects with securities to ensure investor protection, by registering their firms. He also expressed the need to put strong crypto regulations in place and several businesses have been facing the SEC’s scrutiny.