The SEC has issued a no-action letter to Pocketful of Quarters, Inc., or PoQ, regarding the sale of gaming tokens called Quarters to be used on the Quarters Platform to play Participating Games.
In its no-action request, PoQ notes that the economics of the video gaming industry have transitioned from games and gaming systems with relatively high initial costs to the consumer but which are generally free to play once purchased, to offerings that are free to play and instead generate revenue by inducing gamers to make ongoing in-game purchases using native in-game currencies.
PoQ also notes gamers are spending an increasing amount of money and time to buy or “earn” these in-game currencies, and they frequently wind up failing to consume all of their hard-spent and/or hard-earned value. Gamers’ inability to efficiently use their in-game currencies stems from the fact that current in-game currencies are not compatible across different games, which results in gamers often abandoning their purchased or earned in-game currencies and starting from scratch when they decide to play a new game. To prevent the loss of value resulting from in-game currency fragmentation, improve player experience, and enhance gameplay behavior, PoQ has financed and developed the Quarters Platform for gamers that leverages the benefits of blockchain technology.
In granting no-action relief that the sale of Quarters does not need to be registered, the SEC noted, among other things, that:
- PoQ will not use any funds from Quarters sales to build the Quarters Platform, which has been fully developed and will be fully functional and operational immediately upon its launch and before any of the Quarters are sold;
- the Quarters will be immediately usable for their intended purpose (gaming) at the time they are sold;
- PoQ will implement technological and contractual provisions governing the Quarters and the Quarters Platform that restrict the transfer of Quarters to PoQ or to wallets on the Quarters Platform;
- gamers will only be able to transfer Quarters from their Quarters Hot Wallets for gameplay to addresses of Developers with Approved Accounts or to PoQ in connection with participation in e-sports tournaments;
- Quarters will be made continuously available to gamers in unlimited quantities at a fixed price;
- there will be a correlation between the purchase price of Quarters and the market price of accessing and interacting with Participating Games; and
- PoQ will market and sell Quarters to gamers solely for consumptive use as a means of accessing and interacting with Participating Games.