Funs.AI Sets Compliance Strategy for SocialFi Amid SEC Regulations

*SAN FRANCISCO — October 29, 2024* — Funs.AI, a SocialFi innovator, announced a comprehensive compliance strategy focused on meeting U.S. regulatory standards as it prepares for the introduction of the FIT21 Act and increased oversight by the Securities and Exchange Commission (SEC). Funs.AI’s approach prioritizes security for users and investors, aiming to foster a sustainable platform in the evolving landscape of social and financial technologies.

Navigating the Regulatory Environment for Crypto

The U.S. has recently seen extensive regulatory scrutiny across several agencies: the SEC, Commodity Futures Trading Commission (CFTC), Financial Crimes Enforcement Network (FinCEN), IRS, DOJ, and others, leading to more than $19 billion in fines imposed on crypto firms by 2024. The SEC is set to make crypto oversight a priority in 2025, reinforcing the importance of regulatory compliance for projects like Funs.AI that aim to safeguard investors and users.

New Legislation: The FIT21 Act’s Influence on Crypto Projects

The FIT21 Act, passed by the U.S. House of Representatives in 2024, aims to clarify regulatory oversight by delineating authority between the SEC and CFTC. Digital assets are classified either as “digital commodities,” regulated by the CFTC, or “digital securities,” overseen by the SEC. Furthermore, the Act’s decentralization guidelines require that no single entity holds more than 20% of a project’s voting rights for it to qualify as a commodity, incentivizing projects to decentralize and adhere to consumer protections. Now under Senate review, FIT21 may be implemented as early as 2025, marking a significant shift for crypto regulation.

Funs.AI’s Proactive Compliance Strategy

1. Security Token Offering (STO)  

   Funs.AI will issue the KNOWP token through a Regulation D 506(c) Security Token Offering (STO). Unlike traditional ICOs, the KNOWP token will offer holders shareholder rights, including dividends, fostering trust and providing a tangible return on investment.

2. Thorough Due Diligence  

   To ensure transparency, Funs.AI has undergone a comprehensive due diligence review on a compliant exchange, encompassing assessments of corporate structure, team qualifications, and a vetted project roadmap. This rigorous process is designed to foster confidence and credibility.

3. Investor Safeguards  

   In alignment with SEC requirements, U.S. investors must meet Accredited Investor standards, and all international investors are subject to Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. Funds remain in escrow until investment goals are achieved, and tokens distributed in the initial offering will be locked for a year. This lockup period strengthens investor protections and builds confidence.

4. Regulatory-Aware Tokenomics  

   Funs.AI collaborates with legal advisors and compliant exchanges to design a token economy for KNOWP that meets securities regulations and supports its platform utility. Monitoring regulatory developments like the FIT21 Act allows Funs.AI to adapt proactively, protecting both users and their rights within the platform’s economy.

5. Listing on Compliant Exchanges  

   The KNOWP token is expected to list on a U.S.-based, STO-compliant exchange by late 2025, providing high standards for security and liquidity. The platform offers end-to-end digital securities custody and adheres to a licensed trading process, offering a secure exit strategy for investors.

6. International Compliance Expansion  

   Funs.AI is also developing strategies to comply with financial and data privacy regulations globally. Exclusions apply to high-risk regions like North Korea, Iran, Syria, and Cuba, and KYC/AML standards are tailored to meet requirements in various locations. Regular compliance reviews keep the platform current with international regulatory changes.

7. Community Governance via DAO  

   Funs.AI’s decentralized autonomous organization (DAO) model enables users to submit proposals and vote on major decisions. This approach bolsters transparency and minimizes operational costs while empowering the community to shape the platform’s future.

8. User Education on Compliance  

   To cultivate an informed user base, Funs.AI plans to launch a compliance-focused educational program. This initiative aims to educate users on compliant crypto engagement, enhancing risk awareness and promoting responsible platform participation.

Conclusion: Compliance as a Catalyst for Success

For SocialFi projects, compliance with evolving U.S. and global regulatory standards is crucial. Funs.AI’s strategy ensures it is prepared to meet these requirements, laying the foundation for a secure, legally sound platform that fosters growth. As the SEC and FIT21 Act introduce regulatory clarity, Funs.AI’s commitment to compliance positions it for long-term success in the SocialFi sector.