Short-video app Chingari has raked in $19 million to build a currency of its own. 

Well, not Chingari technically—the funding has been raised by Chingari Foundation, an entity registered in the Cayman Islands and controlled by Chingari's chief executive Sumit Ghosh. 

A funding round, especially one associated with a social media company, wouldn’t usually be relevant news for Tokenised. But this one did not involve the sale of any ownership stake. Instead, Chingari conducted a “token sale” that saw participation from investors such as crypto exchange Kraken, Alameda Research, Galaxy Digital, Republic Crypto, and Solana Capital. 

To put it simply, token sales involve the creation of a blockchain-based asset—in this case the GARI token—which is sold to investors, who usually agree to a lock-in period during which these tokens cannot be sold on a crypto exchange. 

The raised funds will be used to build and launch the token to the general public, after which the token will function “both as a future in-app currency and a governance token,” according to a white paper released by Chingari. (If you are unclear about what a governance token is, check out our Back of the envelope section below this piece). Therefore, GARI in its final form would resemble something of a hybrid between an ownership stake in the foundation and a currency for the short-video app.

Without going too deep into the weeds on this, it'd be fair to deduce that Chingari Foundation was off-shored to avoid the regulatory uncertainty surrounding crypto assets and token-sale fundraisers in India. The foundation has plans to transition into a decentralised autonomous organisation (DAO)—a way of setting up a token-issuing entity in which all token-holders act like shareholders do in a traditional company.

While Chingari itself is headquartered in Bengaluru, Ghosh told The Ken he chose Cayman Islands for Chingari Foundation because, “most of the crypto projects … are registered there and our lawyers suggested we use the same geographies”. (Nishith Desai Associates have been hired as its attorneys). Since the money has been raised outside India, the matter effectively falls outside the purview of Indian regulators.

The foundation will mint a total of 1 billion tokens that will be operational on the Solana blockchain and, after early private transactions, 20% of them will be made available for public sale. Another 5%, or 50 million tokens, will be airdropped—distributed without solicitation—to Chingari’s users. 

• Raghuram Rajan, former governor of India’s central bank, has urged caution on central bank digital currencies (CBDC). Badly designed CBDCs, he said, could lead to poorer choices for consumers and deter innovation in the private sector. [The Hindu]
   
• Hatten Land, a mall and property developer in Malaysia, is exploring business opportunities in crypto mining—including using energy from solar panels placed atop malls managed by the group. [Bloomberg]
   
• An umbrella group of global financial regulators has issued guidelines on regulating stablecoins. The International Organization of Securities Commissions noted in its report that such assets should have “little or no credit or liquidity risk,” and warned that customers could be exposed to significant downsides if stablecoins broke their peg to/with fiat currencies. [Financial Times]
   
• The Biden administration is considering an executive order towards regulating crypto-assets in the United States, including the possible appointment of a White House “crypto czar.” [Bloomberg]
   
• China has added crypto mining to a draft list of industries in which investment is restricted or prohibited. [Reuters]

• Popular examples: UniSwap [UNI], Aave [Aave], and Maker [MKR] are three leading governance tokens. The first is used by the crypto exchange Uniswap, and the other two by automated borrowing and lending protocols Aave and Maker. 
   
• Market capitalisation:  The three tokens mentioned above have a combined market capitalisation of about $18.8 billion.
   
• Caveat: While the jury is still largely out on such tokens, in some cases—like if the token isn’t widely distributed enough and is offered as an investment opportunity—it could be considered a securities offering and run afoul of regulations. 

[Source: Steve Hanke/Twitter]

It’s been four months since the Latin American nation of El Salvador granted bitcoin legal tender status. But international bond markets aren’t impressed. 

The value of El Salavdor’s government bonds due in 2035 has fallen 17% since the adoption, according to a recent report by the Wall Street Journal. And it’s not just the bond markets, citizens have also staged protests against the move and have reported troubles accessing and transmitting money via ATMs. “He is playing Russian roulette with public money,” Ruth López, a Salvadoran lawyer, told The New York Times, referring to El Salavador’s President Nayib Bukele.
 

While President Bukele has put out enthusiastic tweets about mining bitcoin using volcanic energy, early fiscal returns seem to indicate that the gamble is probably better PR than economics.