Crypto exchange Backpack is preparing a token-to-equity conversion programme that it claims navigates US securities laws by attaching equity rights to a VIP scheme rather than directly to its forthcoming token.
Co-founder and chief compliance officer Can Sun said the arrangement separates the digital asset from Backpack’s business performance, requiring users to trade on the platform, use its services and lock up the token for an extended period to qualify for equity conversion.
“The token could be floating out there to anyone, but if you don’t use Backpack, if you don’t stake it for a year, then it has none of those rights,”
Said Backpack co-founder and chief compliance officer, Can Sun.
Sun argued that the conversion feature is a property of the exchange’s VIP programme rather than the token itself, in a bid to avoid the regulatory scrutiny that US authorities have historically applied to tokens offering direct claims on a company’s success.
“The remedy for an unlicensed securities offering is registration,”
Said Backpack co-founder and chief compliance officer, Can Sun.