Swarm's Accepting Submissions for 'Second Class' Investments and Announces Legal Framework for 'DCOs'

Published at: Feb. 23, 2015

Art by: Jing Jin

Swarm is opening its second round of investment for projects on its crowdfunding platform, as well as revealing a new legal structure for distributed organizations. Along with what they believe to be new, sound legal footing is a new name for these newfangled blockchain powered organizations: Distributed Collaborative Organizations or DCOs. 

Swarm, for the uneducated, is a crowdfunding platform and bitcoin incubator that utilizes both Ethereum and Counterparty to enable companies to launch their own coins for crowdfunding and the holders of Swarm's own coin will receive a proportional amount of all coins launched on the Swarm platform. Swarm uses the money raised in the sale of its own coin for expenses and investing in promising projects.

This time around, they are partnering with Focus Investments, who has already invested in Gems, NXT, Counterparty, Factom and others. As was the case in the first class of companies, Swarm will be adding five companies to its platform. Swarm plans to invest between US $5,000 and US $50,000 per company. That investment would be in addition to anything else the crowd invests into the company by buying their coins themselves.

Companies can submit their pitches to Swarm starting today until Friday, February 27. While the investment totals aren't high enough that companies won't have to seek out other outside investments, the amount is enough to be a powerful motivator for getting companies to use the platform and therefore, getting more useful companies on the platform for people to invest in.

“The projects in this round will be pioneering a new model of truly distributed ownership and setting ground work for all future crowdsales. It's really exciting and I can't wait to see what they do with these tools that Distributed Collaborative Organizations can provide." - Andrew Cook, COO at Swarm.

The DCO legal framework is potentially big news. The worst kept secret in crypto right now is that people don't know how regulators, particularly in the US, are going to respond to DACs, the “don't-call-them-stocks” tokens and assets and other Bitcoin 2.0 projects that could, under a certain viewpoint, be considered investment securities.

The new legal framework and the Distributed Collective Organization moniker was developed by Harvard's Berkman Center for Internet and Society, Coin Center and “a few top legal firms.” This will, Swarm hopes, enable them to continue with their original vision. Swarm publicly pulled back from its original plan due to concern's its legal department had about the process. Swarm and its legal representatives now believe they “definitely” can move forward and that their crypto-equity projects will not fall under the same legal framework as stocks and securities.

If you have a project you think is worthy of Swarm funding, there is a form you can fill out. As mentioned, the deadline is this Friday, February 27.

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