OSC LaunchPad | Nov 23, 2017

Release:  OSC Launchpad approves Token Funder to be the first token offering out of Ontario

OSC approves initial coin offering

Investment Executive | James Langton | Nov 23, 2017

The Ontario Securities Commission (OSC) has approved Ontario's first-ever regulated initial coin offering (ICO).

Under the auspices of the Canadian Securities Administrators' "regulatory sandbox", the OSC granted regulatory relief to Toronto-based Token Funder Inc., which will exempt the firm from the dealer registration requirements, and allow it to carry out an ICO under existing prospectus exemptions.

"We are pleased to announce that we just approved the first token offering out of Ontario. It is important that we continue to foster innovative new ways to raise capital and invest, and this announcement is a testament to the dedicated support we are providing in this space," the commission says in a statement.

According to the OSC's decision, the firm was established to create a "smart token asset management platform", which is intended to, among other things, "facilitate third-party issuers raising capital through the offering of blockchain-based securities, including tokens and coins."

Token Funder also intends to provide token and coin management and governance services for issuers, and to facilitate token transfers, subject to regulatory approval.

The proposed ICO will be used to fund the creation of the platform, and to facilitate transfers of digital FNDR tokens under prospectus exemptions. The firm is planning to create 1 billion FNDR tokens on the ethereum blockchain, and to distribute up to 200 million on them as part of the offering (raising around $10 million).

The relief was granted with conditions, including: the firm will conduct know-your-client (KYC) and a suitability review for each investor; and investors undergo a comprehensive onboarding process to ensure, among other things that they have a "detailed understanding" of cryptocurrency and digital token offerings.

This "should not necessarily be viewed as a precedent" for other firms, the OSC decision says.

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit ncfacanada.org.