Chia (XCH)—a layer-1 blockchain developed by BitTorrent creator Bram Cohen—is soaring after the Chia Network signaled its intention to become a publicly listed company.
“Chia Network, Inc. today announced that it has confidentially submitted a draft registration statement on Form S-1 to the U.S. Securities and Exchange Commission (the 'SEC') relating to the proposed initial public offering of its common stock,” said the company in a press release on Friday. Chia Network, Inc. is the company behind the blockchain-based network.
Chia blockchain's native token XCH was trading for $40.62 a 9:00 am ET on Friday, before pumping 12% to hit a daily high of $45.38. The cryptocurrency is the #140 ranked digital asset by market cap, according to CoinGecko, with a total value of $315 million.
Unlike networks like Bitcoin and Ethereum which use proof-of-work or proof-of-stake consensus mechanisms, Chia uses a novel "proof of space and time" mechanism to validate network transactions. Instead of miners and validators, the Chia network turns to "farmers" to write 100GB "plots" of hashes on their hard drives and solid-state drives.
Though the firm has not determined a potential size or price range for its offering, it expects to commence its IPO after the SEC completes its review process.
Through its website, the company had previously signaled interest in being publicly listed on the NYSE or NASDAQ, and subject to public reporting under the Securities Act of 1934.
Many of today’s most popular blockchains today began by raising money through initial coin offerings (ICOs) to spur development for their projects, promising to issue cryptocurrency to early investors when the project began.
By contrast, Chia network’s common stock and internal currency are separate assets, with the latter offering no governance rights to its holders.
"We never did an ICO and are approaching operations as a standard company seeking to go public," the Chia Network team told Decrypt via email. "We believe that as a public company, the accountability mechanisms and required transparency are necessary for the industry to gain adoption with real use cases."
In fact, the company explicitly agrees with the SEC’s position that “most ICOs are illegal unregistered securities offerings,” per its site.
“We don't believe the Howey test is difficult to apply, are confident that XCH doesn’t constitute a security under Howey, and have proactively engaged with the SEC,” reads the firm's compliance efforts.
Editor's note: This article was updated after publication to include comments from Chia.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.