Spooked By SEC, Video Streaming ICO Halts Airdrop

Entrepreneurs are starting to doubt that crypto tokens can be used at all in the U.S.

In fact, according to Simar Managt, the co-founder of distributed video streaming startup Stream, the current environment of regulatory uncertainty and rumors of subpoenas is putting such a pinch on projects that many are thinking about “moving elsewhere.”

But, while that hasn’t happened yet for the Silicon Valley-incubated startup, the threat of regulator action is leading it to overhaul its product roll-out – drastically. Announced Tuesday, Stream is releasing a white paper that outlines its token distribution, but the process is on hold until the team knows how U.S. regulators will permit its tokens to be used.

Launched in October, Stream had planned to give live-streamers, vloggers and online video makers a way to break platform lock-in by building a Chrome extension that allowed fans to tip creators wherever a video appeared, but the firm says its whole project has now been thrown into question.

Mangat explained:

“If there were a path of how to do things right, that would be so much better.”

The problem for Stream is that its strategy relies heavily on using a so-called “utility token” to fuel a distributed network. Not only that, but the ability of tokens to be distributed and traded easily and converted to fiat currency made them ideal for Stream’s business plan.

And this fitted with general industry thinking until very recently.

In 2017, startups generally believed that a utility token would be good to issue so long as the platform went live eventually. Even then, many doubted that they could be sold prior to a platform launch to non-accredited investors, but startups have begun canceling public sales amid the uncertainty.

Now, Stream’s counsel is questioning if any tokens at all can be circulated in the U.S. without the full know-your-customer (KYC) and anti-money laundering (AML) registration of anyone that holds them, or if stream tokens must now be registered as securities.

Spanner in the works

And that determination could dramatically impact Stream’s strategy.

According to the white paper, $100 million in tips went to content creators in 2017, but the authors believes more value could have been unlocked through the use of blockchain-based currencies that, like its token, enable tip creators to exchange crypto for real-world value.

In many ways, the idea builds on what YouTube started, giving individual creators a way to build audiences and one-person entertainment businesses. And even Silicon Valley names who have been involved in successful video startups see Stream’s model as a natural evolution.

Steve Chen, a YouTube co-founder, is an advisor to Stream today.

“They actually built this idea of a content creator and being able to create that kind of economy,” Mangat said of YouTube’s originators.

Stream would let creators keep the lion’s share of what their tips earned, all driven by the speed and efficiency of the ethereum blockchain. Adoption would take a while with fans, of course, but as long as platforms like Twitch keep 40 percent of tip revenue, creators have an incentive to persuade followers to switch.

However, if Stream can’t use its token, it raises questions about whether the company can do anything at all.

‘Rebasing’ Stream

Borrowing terminology from GitHub, the founders are now doing what open-source coders call a “rebase,” aiming to make the best of a difficult path ahead…

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