Blockchain startup Colu is eliminating blockchain from its business plan.

Citing regulatory uncertainty, technical challenges and growth in non-blockchain related opportunities the company is concluding its blockchain project, the Colu Local Network (CLN), according to a statement.

As part of the scale down, the company will repurchase approximately 54 million tokens sold during its $17 million ICO from those that participated in the crowd-sale.

The CLN token, which ran on the Colu Local Network, was used as a means for retail payments and provided incentives for consumers to shop locally. The company aimed to mitigate the threats of the “retail apocalypse.” It also built an app to help small businesses manage paperless transactions and help locals discover local merchants.

The company launched the token project in four cities, including London, Liverpool and Tel Aviv. It received an additional $14.5 million from financial and insurance company IDB Group for the project.

Colu will repurchase the tokens in ether at the original crowd-sale ETH to CLN rate, which it notes “is higher than the current market exchange ratio.” The company has set a buy-back window of 90 days, after which the tokens will be burned.

The company plans to create a website dedicated for the repurchase. It also says holders in several companies will be excluded, including those in the United States and Canada. Additionally, only those who complete KYC and AML processes will receive repayment.

Culo recently launched the Belfast Coin, in partnership with Belfast City Council, and coin for use in the Municipality of Tel Aviv-Yafo. Neither project is blockchain-based and both will continue to operate.

“The Colu Group is also in talks with a number of other municipalities across the world, about introducing similar initiatives,” according to a statement.

Dan Ariely, professor of behavioral economics, told Crowdfund Insider:

“Colu DLT’s decision to purchase CLN tokens appears unprecedented in the industry. It demonstrates how the Colu Group’s core values guide its actions. The Colu Group is focused on fostering relations between municipalities, local businesses, residents, and other city stakeholders. These relationships rely on the very same kind of trust and consideration, which is now being shown towards CLN token holders. It is wonderful to see the Colu Group following their ethical standards not just in words but in action. Such acts of giving up profits for the benefits of customers, partners, and investors are crucial to this tech sector if we want it to continue to evolve and grow.”

Colu DLT’s Chairman of the Board of Directors, Amos Meiri, said “blockchain may yet help to” build trust between people and foster local economies.

Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Colu.

Coins image via CoinDesk archives