
The Modern IPO Is Useless. Let's Reinvent It - jkuria
https://www.wsj.com/articles/the-modern-ipo-is-useless-lets-reinvent-it-1506361770
======
lucas3677
I'd be curious to hear a rebuttal to this article I read the other week
criticizing Social Capital / SPACs by someone more knowledgeable about this
field than me: [https://www.bloomberg.com/view/articles/2017-09-15/icos-
vcs-...](https://www.bloomberg.com/view/articles/2017-09-15/icos-vcs-ipos-and-
spacs)

~~~
shalmanese
Matt Levine has been great at puncturing the overblown hyperbole about SPACs
and generally pointing out how silly Social Capital is.

The entire saga:

[https://www.bloomberg.com/view/articles/2017-08-24/unicorn-s...](https://www.bloomberg.com/view/articles/2017-08-24/unicorn-
spacs-and-cargo-quants)

[https://www.bloomberg.com/view/articles/2017-09-15/icos-
vcs-...](https://www.bloomberg.com/view/articles/2017-09-15/icos-vcs-ipos-and-
spacs)

[https://www.bloomberg.com/view/articles/2017-09-19/memory-
mo...](https://www.bloomberg.com/view/articles/2017-09-19/memory-mortgages-
and-puzzles)

edit: also, [https://ftalphaville.ft.com/2017/09/19/2193913/the-public-
ma...](https://ftalphaville.ft.com/2017/09/19/2193913/the-public-markets-
arent-nearly-broken-enough/)

------
omarchowdhury
It's being reinvented. It's called an initial coin offering. And now I shall
drown in downvotes.

I'll redeem my self with a non paywall explanation of Social Capital's S-1
filing: [https://www.recode.net/2017/8/23/16194374/social-capital-
inv...](https://www.recode.net/2017/8/23/16194374/social-capital-investment-
firm-banks-ipo-public)

~~~
wslh
I think it is something more in between. Currently ICOs don't protect
investors in any way. One financial sandbox alternative is to enable capped
ICOs to offer securities for real startups. I am tired of utility tokens
without too much utility and great speculation.

~~~
ringaroundthetx
> I think it is something more in between.

Yes. One which addresses the unique aspects of the technology, adds consumer
and investor protections, and acknowledges the liquidity benefits of an
inevitable secondary market which no gatekeeper can prevent.

> One financial sandbox alternative is to enable capped ICOs to offer
> securities for real startups.

And not this.

~~~
wslh
> And not this.

Why not?

~~~
ringaroundthetx
securities for real startups most likely means equities in real startups,
which comes with the illiquidity burden that people just don't want.

a totally roundabout way of using tokenized assets at all

~~~
charlesdm
Not if they are tradable and (semi) liquid? Isn't that the whole point, to
raise capital through an ICO + eventually make said tokens (representing
equity) tradable from the start, so you have liquidity?

~~~
omarchowdhury
Yeah, I don't understand why he's contradicting himself.

~~~
ringaroundthetx
Do you two understand securities laws?

So properly registered startup securities cannot be traded on properly
registered securities exchanges.

If they are not properly registered and only sold to accredited investors,
then they can only trade OTC to accredited investors.

The costs of registering to trade on properly registered securities exchanges
are too high for startups.

The ongoing costs of transparency for publicly traded securities are too high
for startups.

Registered broker-dealers that are able to trade properly registered tokenized
assets do not currently exist, even if a tokenized offering were to properly
register as a publicly tradable security.

Currently, people are avoiding all of this and get tradable assets with near-
zero compliance costs. The rebuttal isn't "just register", it is "just
register at a very high cost and lose all the benefits you already enjoyed at
a lower cost and lose every possible service provider for the foreseeable
future"

~~~
omarchowdhury
Yes, I understand securities law. There will be proper avenues to trade
tokenized securities within the next 12 to 24 months. There is atleast one
high profile crypto exchange in the U.S. working on this that I've learned
from an inside source. Your argument is essentially that the infrastructure
hasn't caught up yet. It would be naive to think that it won't, especially if
tokenized securities are going to be a massive market.

~~~
ringaroundthetx
Right, that is a possibility. Overstock is also working on it.

But even going that perspective is going to coincide with scalability and UI
improvements which make decentralized exchanges better.

These structures will have no entity to register as a broker-dealer and are
incapable of distinguishing between any smart-contract's legal status

------
arisAlexis
it's called ICO now

