‍Backpack Exchange Proposes Novel Token-to-Equity Model

Cryptocurrency exchange Backpack is developing a unique strategy to allow users to convert digital tokens into company equity, potentially sidestepping SEC scrutiny. Co-founder Can Sun explained that equity rights will be decoupled from the token itself and embedded within a VIP loyalty program, requiring users to trade on the exchange, utilize its services, and stake tokens for at least one year.

This approach aims to avoid classifying the tokens as securities under the Howey Test. Backpack is also preparing to register the tokens as a class of securities during a future public offering, should regulatory bodies deem them so. The exchange is reportedly seeking $50 million in funding at a $1 billion valuation.

https://cryptovka.com/news/backpack-exchange-unveils-token-to-equity-program-legal-strategy