Photographer: INDRANIL MUKHERJEE/AFP/Getty Images

Kik Blames Canadian Regulators for Skipping Country in ICO

  • Messaging app plans to raise $125 million total in offering
  • Kik CEO said ‘weak guidance’ from OSC led to the decision

Kik Interactive Inc., a Canadian messaging app preparing to hold one of the highest-profile initial coin offerings yet, said it won’t allow investors from its home country to participate in the offering.

Chief Executive Officer Ted Livingston blamed “weak guidance” from the Ontario Securities Commission for the decision.

“They have failed to give us clear direction on when Canadian securities law will or, more importantly, will not apply,” Livingston said in a blog post. “To avoid risks arising from this uncertainty, we, a Canadian company, have decided to move forward without Canada.”

Regulators around the world have expressed concerns with ICOs. In Kik’s case, it plans to sell tokens that can be used to buy services on its platform. The idea is that as more people use Kik, the value of their tokens will rise. The Canadian Securities Administrators said in August it would decide whether an ICO should be considered an offering of securities on a case-by-case basis.

The Ontario Securities Commission, the regulator for the country’s biggest province, views Kik’s ICO as an offering of securities and said it had been discussing options with Kik for finding a way to move forward that made sure investors were protected, a spokesperson for the regulator said in an e-mail. The regulator said it recently gave Impak Finance an exemption to do an ICO.

“We continue to be open to such a discussion, and want to work with Kik to ensure that all investors, including Canadian investors, can participate in the offering with appropriate protections,” the spokesperson said .

The move could count as a strike against Canada’s efforts -- spearheaded by Prime Minister Justin Trudeau -- to style itself as a haven for young, innovative tech companies. Still, ICOs are generally seen as a risky new form of fundraising, especially by Canada’s traditionally conservative financial establishment.

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