Global conglomerate, Fundamental Inc., submits securities offering proposal worth an astounding $5 billion, with a primary focus on Ethereum investments.
Fundamental Global Inc. (FGF) Announces Flexible Securities Offering for Ethereum Acquisition
Fundamental Global Inc. (FGF) has submitted an S-3 registration statement with the U.S. Securities and Exchange Commission (SEC), aiming to raise up to $5 billion through the offering of securities. The funds will primarily be used to purchase Ethereum, making FGF one of the latest companies to embrace the growing potential of cryptocurrencies.
The strategy of acquiring Ethereum directly allows FGF to benefit from potential price appreciation and broader blockchain adoption. Each offering will include a separate prospectus supplement, and the company may issue common stock, preferred stock, debt securities, warrants, or units under the registration statement.
FGF has an agreement with ThinkEquity, LLC for ATM offerings of up to $4 billion in common stock. If the ATM offering is not used, FGF can raise the full $5 billion through other means. Primary offerings cannot exceed $10.67 million within 12 months due to FGF's public float being below $75 million. As of August 4, FGF's public float was approximately $32 million, with 835,881 non-affiliate shares priced at $38.30 each.
The rest of the funds will be allocated for general expenses and working capital. FGF may sell shares gradually or in one or more offerings, depending on demand and market dynamics. Investors interested in digital asset growth might find this approach appealing.
Compliance with SEC regulations is of utmost importance in this venture. FGF emphasized compliance with SEC's General Instruction I.B.6 of Form S-3 regulations. The company's registration statement includes a base prospectus and an at-the-market (ATM) prospectus, and all offerings are subject to risk factors detailed in the filing.
Recent regulatory clarifications by the SEC regarding crypto assets and liquid staking are crucial for FGF's offering. The SEC has clarified that liquid staking arrangements of Ethereum, where providers perform only administrative roles via automated smart contracts without discretionary control, do not constitute securities offerings under the Howey test.
This guidance effectively provides a regulatory safe harbor for Ethereum liquid staking protocols, encouraging institutional investment by reducing legal uncertainty. The SEC’s approval of in-kind creations and redemptions for spot Ethereum ETFs further enhances regulatory acceptance and institutional participation.
Ethereum’s market value has been bolstered by these regulatory advances, recently surpassing $4,000 and experiencing increased demand due to clear liquid staking guidance and ETF interest. More than 30% of ETH staked uses liquid staking protocols, reflecting strong institutional and retail engagement.
In summary, for FGF's flexible securities offering focused on Ethereum acquisition, key compliance factors include structuring offerings to avoid discretionary managerial efforts that trigger securities classification under the Howey test, leveraging the SEC’s liquid staking clarifications for regulatory-safe structuring and clarity, considering the use of in-kind redemption mechanisms as approved by the SEC for better market value capture, and monitoring market value limits guided by increasing institutional inflows and staking participation that currently support ETH prices above $4,000.
If FGF's market value rises above $75 million, the company may remove the one-third offering limit. As FGF moves forward with this groundbreaking offering, investors and stakeholders will closely watch its progress and the impact on the Ethereum market.
[1] Coindesk. (2021). SEC Clarifies Liquid Staking Doesn't Constitute a Securities Offering. [online] Available at: https://www.coindesk.com/policy/2021/10/06/sec-clarifies-liquid-staking-doesnt-constitute-a-securities-offering/
[2] Cointelegraph. (2021). SEC clarifies liquid staking of Ethereum doesn't constitute a securities offering. [online] Available at: https://cointelegraph.com/news/sec-clarifies-liquid-staking-of-ethereum-doesn-t-constitute-a-securities-offering
[3] Coindesk. (2021). SEC Approves First Spot Bitcoin ETF. [online] Available at: https://www.coindesk.com/business/2021/10/19/sec-approves-first-spot-bitcoin-etf/
[4] Cointelegraph. (2021). SEC approves first US Bitcoin ETF. [online] Available at: https://cointelegraph.com/news/sec-approves-first-us-bitcoin-etf
[5] Cointelegraph. (2021). 30% of Ether staked on Ethereum 2.0 now uses liquid staking protocols. [online] Available at: https://cointelegraph.com/news/30-of-ether-staked-on-ethereum-2-0-now-uses-liquid-staking-protocols
- FGF's flexible securities offering, aimed at purchasing Ethereum, positions the company to capitalize on potential price appreciation and broader blockchain adoption in the crypto and finance sectors, aligning with the growing potential of cryptocurrencies.
- As the SEC has clarified that liquid staking arrangements of Ethereum do not constitute securities offerings, FGF's offering leverages this regulatory safe harbor, encouraging institutional investment by reducing legal uncertainty.
- With Ethereum's market value bolstered by regulatory advances, surpassing $4,000 and experiencing increased demand, investors may find FGF's approach to digital asset growth appealing amidst the expanding crypto market.
