On August 15th, BlockMason, Blockchain-based developers of distributed applications, announced what is believed to be the first SEC-compliant, public American ICO for their product, the Credit Protocol. The Credit Protocol is a new platform for the creation, tracking, and settling of debts on the Blockchain, in all their different forms.

Unlike most other companies launching an ICO, BlockMason has already released multiple working products and distributed applications prior to the commencement of their token sale. This puts BlockMason on firm legal ground for making their ICO open to purchasers in the United States, an action many companies have feared taking in the wake of the SEC’s report on the DAO token sale.

In BlockMason’s recently published legal opinion, former Department of Justice attorney Stephen Galebach, in consultation with a former member of the SEC, explains that BlockMason’s legal standing is based on two unique factors that separate their token offering from others in the Ethereum community:

The release of multiple fully-functional products prior to the ICO The necessity of Credit Protocol Tokens (CPT) for operating and using the Credit Protocol network, firmly establishing CPT as product-use tokens and not investment tokens

These two features mean BlockMason’s ICO likely passes what is known as the Howey test for investment contracts. According to Galebach, developers without market-ready products and services may sell only their “concepts and future hopes,” meaning their tokens are likely subject to securities law. However, companies with developed products “are able to motivate purchasers by a desire to use or consume the products and services that are offered for purchase, licensing or token-based usage.”

Additionally, it is of vital legal importance that CP Tokens are necessary for customers to utilize the full potential of the Credit Protocol. CPT holders may use their tokens to power applications of their own development, or in applications developed by other companies. BlockMason itself has recently released their first application built atop the Credit Protocol, Friend in Debt. While the Credit Protocol is a versatile platform for developers to build any variety of credit recording application—from consumer loans to gift cards to university meal vouchers—Friend in Debt is a simple and powerful program for tracking social debts among friends. Unlike Venmo, a centralized competitor, Friend in Debt is not restricted by borders, currency, or banking, and its beta version is already deployed for public vetting on the testnet for anyone with a Metamask supported browser.

Since the SEC’s report on the DAO, many other companies have claimed their ICOs are SEC compliant, yet only BlockMason has made its ICO open to the public, and not just accredited investors (as was the case with Filecoin). The reasons for this reticence may be money, but BlockMason cofounder Jared Bowie has his own theory:

“Any company that opens an ICO, but does not offer their token for sale in the U.S. confirms their fear that their token is at risk of SEC regulation.”

For more information on the token sale, visit https://blockmason.io/ projects/ico/. To read the Credit Protocol whitepaper, visit http://blockmason.io/cp- whitepaper/.