BTCSBTCS

Please revise to disclose the amount of all securities offered pursuant to General Instruction I.B.6 during the prior 12 calendar month period. Refer to Instruction 7 to the General Instruction I.B.6 of Form S-3.

The

Company has added this disclosure to the Form S-3/A. Read in the reply ↗

Please confirm your understanding that we will not be in a position to declare your registration statement effective until all outstanding comments regarding your Form 10-K for the fiscal year ended December 31, 2022 have been resolved.

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In addition, to the extent that any comments related to our review of your Form 10-K apply to disclosure in the registration statement, please make corresponding revisions to all affected disclosure. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. Refer to Rules 460 and 461 regarding requests for acceleration. Please allow adequate time for us to review any amendment prior to the requested effective date of the registration statement.

Company confirms that the Form S-3 may not go effective until after all outstanding comments regarding the Form 10-K have been resolved.

Should the Staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the Staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Brian S. Bernstein, Esq. or Michael D. Harris, Esq.

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of Nason Yeager Gerson Harris & Fumero, P.A., the Company’s legal counsel, at 561-686-3307, bbernstein@nasonyeager.com and mharris@nasonyeager.com.

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Please provide us with your legal analysis as to why you believe your activities supporting staking-as-a-service are executed in compliance with the federal securities laws, including why the agreements related to the staking-as-a-service program are not securities under Section 2(a)(1) of the Securities Act. In responding to this comment, please include a materially complete description of the program.

Staking as a Service Program Overview uses its blockchain infrastructure to operate validator nodes on various proof of stake-based blockchain networks. In connection with the validation of transactions occurring on those blockchain networks, BTCS stakes digital assets native to those blockchains in order to earn staking rewards. BTCS also uses its blockchain infrastructure to validate and sign transactions on behalf of customers that delegate their validation to BTCS-operated validator nodes (referred to as “Staking as a Service” or “StaaS”).

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Unlike

Coinbase and Kraken, BTCS does not take custody and pool customer crypto assets or customer crypto rewards; rewards are sent directly to customers by the respective blockchain network and are never in BTCS’s possession. Similarly, BTCS, unlike Coinbase and Kraken, only offers StaaS for delegated proof of stake blockchains, not proof of stake blockchains like Ethereum. While BTCS does stake Ethereum which is a proof of stake blockchain it only does so with its own crypto assets. The key differentiating factor is that BTCS does not take possession of users’ private “keys” or “crypto” as further detailed herein.

Securities and Exchange Commission

October 16, 2023

StaaS providers are operators of computer infrastructure and validation software that allow them and their delegators (collectively, the “Delegators” and each, a “Delegator” or as may be referred to herein as “clients”, “customers” or “users”), to stake certain blockchain-based digital assets native to blockchain networks (“native digital assets”) utilizing a delegated

Proof of Stake (“dPoS”) consensus protocol. dPoS protocols provide for the validation of transactions on the related network as well as a “sybil resistance” mechanism to help secure the network.

The nodes comprising a blockchain network use a protocol (or set of rules) to reach an agreement as to whether a given transaction proposed by a user of the network is valid under the rules of the protocol and should be added to the ledger (such agreement being referred to as “consensus”). Protocols typically group transactions into blocks that can only be added to the common ledger when validated by a sufficient percentage of a dispersed network of unrelated computers or servers called “nodes” in the network. A complete record (or “blockchain”) is maintained on the ledger by adding these groups (or “blocks”) of transactions to the chain, and the nodes constantly automatically monitor the blocks to ensure record accuracy.

dPoS networks rely on validators who own native digital assets and operate nodes for the network to confirm the validity of the transactions comprising each block to be added to the network ledger. The dPoS protocol software run by the relevant network nodes generally determines the validator node for each block at random, though each blockchain may have differing selection criteria. To be eligible to validate transactions and to mint new blocks to the chain, validators are required to “stake” the relevant native digital assets whereby validators commit value (in the form of the native digital asset) to the underlying network and lock their native digital assets, preventing them from otherwise transacting with those native digital assets while they are staked. The dPoS mechanism is a sybil-resistance tool

(fights against attacks on nodes) that incentivizes validators to confirm transactions that conform to the rules of the protocol at the risk of losing their staked assets (“slashing”). Validators utilizing their native digital assets to participate in dPoS protocols secure the relevant network and receive staking rewards for doing so.

Validators in a dPoS network collect newly minted native digital assets and sometimes receive other transaction fees for the blocks they validate.

These “rewards” in the dPoS network encourage validators to participate in the network and thereby help to secure and decentralize the network.

A

StaaS provider maintains a ministerial role in validating transactions on a given dPoS network on behalf of its delegators by (1) arranging transactions using open-source software to stake the relevant digital assets; (2) monitoring the nodes it is operating to ensure the computers remain online to validate transactions; and (3) verifying transactions on the network when required.

Depending on the dPoS network, a holder of native digital assets can generally participate in staking in three different ways: (1) act as principal, staking their own digital assets as collateral ; (2) delegate their ability to participate in transaction validation to a third-party

StaaS provider, such as BTCS, allowing the provider to validate new transaction blocks on the underlying network; or (3) give custody of their digital assets to a provider (e.g., Coinbase or Kraken), who then acts as principal to stake the assets and validate transactions on the owner’s behalf.

does not take custody of native digital assets on behalf of clients in connection with providing StaaS and all delegated assets are subject to the rules of the respective blockchain.

Law Analysis

From a securities law perspective, the key question is whether a StaaS scheme or arrangement constitutes a “security.” The federal securities laws define the term security to include a variety of different assets.1 For purposes of an analysis of whether the non-custodial staking business of BTCS involves the sale or purchase of a security, the key statutory phrase is “investment contract.” Digital assets, or transactions involving digital assets, that are not plainly one of the other types of securities enumerated in Section 2(a)(1) of the Securities Act or Section 3(a)(10) of the Exchange Act may still be deemed to constitute part of an “investment contract” and, therefore, be considered securities by the SEC.2 test to determine whether a particular scheme would be considered an “investment contract” was established in SEC. v.

W.J. Howey Co., 328 U.S. 294 (1946), and has come to be known as the “Howey test”.3 The Howey test looks at whether the scheme involves:

(1) an investment of money;

(2) in a common enterprise;

(3) with the reasonable expectation of profits; and

(4) solely from the efforts of others. This last prong of the Howey test has been modified by subsequent case law to require an expectation of profits derived from the essential managerial efforts of others.4

Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77b(a)(1) (2023); Securities Exchange Act of 1934 (the

“Exchange Act”), 15 U.S.C. § 78c(10) (2023) (defining “security” and listing a variety of assets that are considered securities including an “investment contract”).

See SEC v. Edwards, 540 U.S. 389, 393 (2004) (defining an investment contract as a definition that “embodies a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits” (quoting SEC v. W.J. Howey Co., 328 U.S. 293, 299 (1946)).

SEC v. W.J. Howey Co., 328 U.S. 293, 301 (1946); see also SEC. v. Edwards, 540 U.S. 389, 393 (2004).

SEC v. Glenn W. Turner Enters., Inc., 474 F.2d 476, 482 (9th Cir. 1973).

All four elements of the Howey test must be present for a scheme to be considered an “investment contract” under this test. As detailed below the economic reality of BTCS’s non-custodial StaaS program does not meet any of the four elements of the

Howey test and does not create an investment contract.

I. Investment of Money

BTCS’s

StaaS service is non-custodial meaning BTCS never takes possession or has control of either a delegator’s staked crypto assets

(private keys) or the reward earned for staking their crypto assets so therefore does not involve an investment of money. In November

2022 BTCS submitted an inquiry to the SEC’s Strategic Hub for Innovation and Financial Technology (“FinHub”) which outlines three methods in which staking can be performed. See Schedule 1. The SEC was unable to provide guidance that having staking rewards “flow through” BTCS to delegators would not inadvertently create a security under the Howey test. As such

BTCS elected to implement non-custodial staking (aka Native staking) which clearly does not create a security under the Howey test.

While delegators use the assets they own, and give up alternative uses of those assets during the time they are staked, the opportunity cost of staking is not an investment. Unlike stakers in custodial platforms, those who use BTCS’s non-custodial StaaS retain full ownership and control over their crypto assets at all times, which means, by definition, there cannot be an investment. By contrast, in Howey, the investors had no custody of the orange grove they invested in. Instead the passive investors entered into a services contract with

W. J. Howey Co., and the primary risk they faced was not a breach of contract, but the financial risk of a failed enterprise. If the company failed in its management of the enterprise, or if other risks such as poor weather or a depressed orange market intervened, there would be insufficient oranges to sell to make up the investors’ losses. The investors were betting on the ability of the company to successfully grow and sell oranges at a profit meaning the company could perform every promised action and yet the investors could still face a loss. This analog does not exist with BTCS’s non-custodial StaaS model. Delegators are not betting on the success of BTCS or its StaaS platform as an enterprise. Delegators are using existing staking protocols to reap a benefit, which they could do directly or through a service provider as a convenience. While there is a risk that the service could fail to achieve the promised capabilities, that failure would be a breach of contract, not a failed investment.

Any rewards the users receive are not investment gains. Reward payouts are paid by the blockchain network directly to a delegator’s wallet and are simply the result of the successful performance of compliant validation in which the delegator participates, which is dictated by the blockchain protocol, not BTCS. There is neither the risk that the service provider will fail to make good choices about staking, nor that the provider failed to accurately predict and adjust for market events. There is only the risk that the provider did or did not comply with a prescribed set of rules. That is simple contractual risk—no different than the risk a company faces when hosting its website on Amazon Web Services, or what a car owner faces when trusting a vehicle to a mechanic, or what a homeowner faces in trusting the completion of renovations to a contractor. Such a simple contractual risk is not the type of risk the securities laws were intended to address.

Whether an investment of cash or other assets, the courts have agreed that there must be risk of financial loss. The “investment of money” prong narrows the types of financial risk that securities laws and regulations concern itself with. The risk of financial loss must be the type of loss that accompanies an investment and not the risk that every party to a contract faces when depending on the other party to perform its obligations under the contract. The risk of financial loss is simply absent from the use of BTCS StaaS validator nodes, and therefore only a contract for services exists. BTCS delegators can delegate and withdraw their supported native digital assets as they see fit, subject to the rules of the particular blockchain protocol. Because delegators always retain custody and control over their supported native digital assets (both staked and rewards) and can withdraw them from the BTCS StaaS arrangement at will there is no “investment of money.” Finally, in the event a BTCS creditor were to attempt to seize delegated assets, the creditor would only be successful in seizing BTCS’s own assets) because BTCS does not have custody of delegated assets. Moreover, creditors would not have a valid legal claim to delegated assets.

II. Common

Enterprise

There is no common enterprise among Delegators or between Delegators and BTCS with its StaaS service regardless of whether the definition of vertical or horizontal commonality is used.5

Investors in a common enterprise need the protections of the federal securities laws because the fate of their investment is tied to the fate of the enterprise—either through the seller, promoter, or third party. In many ways this analysis of vertical commonality is similar to the fourth prong of Howey described infra in Section IV below. This vulnerability is categorically different from the kind of routine counterparty risk that can be mitigated by ordinary commercial due diligence, and that is entirely independent of the counterparty risk faced by other customers of a provider. In the context of BTCS StaaS, BTCS does not take custody of delegator assets, meaning they are not joined together in the context of the Howey test, there is no horizontal commonalty, and therefore no “common enterprise.”

Users of native staking or non-custodial staking retain full authority over their assets, with the ability to unstake them, sell, hypothecate, vote, pledge, or otherwise dispose of them independently from the service provider and its other delegators. Since the assets belong to the user throughout, the failure of the entire staking service provider such as BTCS StaaS has no effect on the user’s property rights. The user would only need to find a new provider, or create the necessary set-up to engage in staking as an individual.

See Brodt v. Bache & Co., Inc., 595 F.2d 459, 461 (9th Cir. 1978) (noting that “vertical commonality requires that the investor and the promoter be involved in some common venture without mandating that other investors also be involved in that venture”); Revak v. SEC Realty Corp., 18 F.3d 81, 87 (2d Cir. 1994) (noting that horizontal commonalty involves “the tying of each individual investor’s fortunes to the fortunes of the other investors by the pooling of assets, usually combined with the pro-rata distribution of profits”).

rewards that delegators of BTCS StaaS receive are the same whether the delegators are using BTCS’s StaaS, another validator node, or staking on their own, and are unrelated to the performance of the service provider. The rewards are consideration for the performance of validation tasks and are generated and earned based on the blockchain protocol’s rules once a validator node successfully completes its validation task. Thus, users holding identical assets can expect similar staking rewards from the network because the protocol sets the rewards rates, as such those who individually stake can expect the same rewards from the protocol. Staking through a service provider like BTCS StaaS only increases convenience, not the rewards allocated by the blockchain protocol. Protocol-imposed reward rates do not change whether assets are pooled together, nor does it change whether a validator node is operated by a user or a service like BTCS.

Likewise, the amount of assets staked by a particular node does not increase the reward rate per asset—i.e., the protocol does not pay escalating rewards for staking more assets. Moreover, there is no pooling of rewards even for a brief time so investors are not exposed to risk of reward loss due to BTCS misappropriating the assets or risk from a BTCS creditor.

III. Expectation of Profits expectation of profits prong of the Howey test is met when there is either capital appreciation resulting from the development of the initial investment or a participation in earnings resulting from the use of investors’ funds.

Howey test’s definition of “profits” was initially limited to capital appreciation resulting from a purely monetary investment.6 The Supreme Court’s decision in Tcherepnin however modified the definition to include the expectation of profits through the receipt of dividends.7 In Tcherepnin, the Court determined that the expectation of profit prong of the Howey test was satisfied by the fact that the holders of capital shares in a savings and loan association were paid dividends “tied directly to the amount of profits [the savings and loan] makes from year to year.”8 Because these dividends were an apportionment of the profits made by the venture in which the individuals had invested, the dividends were considered profits for purposes of the Howey test.9 non-custodial StaaS fails the “expectation of profit” prong because the rewards the delegators receive are just payment for ministerial services rendered. Unlike the dividends in Tcherepnin there is no investment of money (value) into capital stock or a common enterprise so there can be no prorated right to any payments on profits. Payment for services is not an expectation of profits.

The Howey decision closely tracked the only analogous precedent existing at the time, SEC v. C.M. Joiner Leasing Corp.,

320 U.S. 344 (1943). There, the Court determined that the profits anticipated by purchasers of fractional interests in oil leases were to come from capital appreciation, resulting from the development of the individuals’ initial capital investment. See, C.M.

Joiner Leasing Corp., 320 U.S. at 351.

Tcherepnin v. Knight, 389 U.S. 332, 339 (1967).

Id.

Id. But see, United Hous. Found., Inc. v. Forman, 421 U.S. 837, 858 (1975) (finding that the “stock” held by individuals in a housing cooperative failed to satisfy expectation of profits prong of the Howey test because individuals were attracted to purchase it by the prospect of acquiring a place to live, rather than the prospect of receiving a financial return on their investment, thus, the Court held that federal securities laws do not apply when investors purchase investment contracts with the expectation of personally consuming or using the interest acquired).

As previously described, the purpose of staking is to provide a validation mechanism for a blockchain network or protocol. The rewards are consideration paid for the validation services the asset owner provides by staking those assets. Those rewards are not returns on investment;

instead, they are service fees, set by the blockchain protocol, and remain the same regardless of whether the customer stakes on their own or through a service. With BTCS’s non-custodial staking, the consideration a delegator receives directly from the blockchain network is for services provided, which is not a reasonable expectation of a return on investment, but a fee paid for performing a job.

Financial risk is one of the reasons that “expectation of profit” is one of the prongs of the Howey test. An investor in a security needs information about the issuer and the planned enterprise to know whether that enterprise is likely to succeed and produce a profit.

The investor takes a risk on the enterprise, preferably an informed one, based on mandatory disclosures. Delegators of BTCS’s non-custodial staking model take no such enterprise risk. There is no need to evaluate the likely success or failure of BTCS’s business plan or its StaaS platform. Thus, staking rewards are paid directly by the blockchain network to each delegator and are not the “profits” envisioned by the Howey test.

IV. Efforts of Others native non-custodial StaaS entails ministerial efforts and not the managerial efforts of others or BTCS. To satisfy this prong of the

Howey test investors must rely on the “efforts of others” and, as later courts have held, those efforts must be characterized as “undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise.”10

Those that are merely ministerial or administrative do not rise to the level required to satisfy this prong.11 example, in SEC v. Life Partners., Inc., the SEC contended that Life Partners, Inc. (“Life Partners”) violated the

Securities Act and the Exchange Act by selling viatical settlement contracts without complying with registration rules under both Acts.12

The court concluded that the contracts were not securities under the Howey test, specifically under the fourth prong: that the profits be generated from the efforts of others.13 While Life Partners had the ability to substitute itself as the beneficiary of the viatical settlement contract after the policy was purchased, the court determined that no efforts by Life Partners could affect an investor’s rate of return because the “exclusive determinant” of an investor’s rate of return was how long the insured lived.14 Ergo, Life Partners could only affect an investor’s profits if it misappropriated funds or failed to perform post-purchase ministerial functions such as “holding the policy, monitoring the insured’s health, paying premiums, converting a group policy into an individual policy where required, filing the death claim, collecting and distributing the death benefit

(if requested), and assisting an investor who might wish to resell his interest,” all of which Life Partners described as “clerical and routine” functions.15 Notably, all of the above-described functions could be done by the investors individually without Life Partners’ involvement.16 Thus, the court determined that the ministerial functions Life Partners performed for investors could not be actions that have an influence on an investor’s profits under the Howey test.17

Framework for “Investment Contract” Analysis of Digital Assets, Strat.

Hub for Innovation & Fin. Tech. of the SEC, https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets

(last visited Oct. 3, 2023) (stating that the analysis of whether purchasers of digital assets rely on the “efforts of others” hinges on whether the efforts are “essential managerial efforts which affect the failure or success of the enterprise” not ones that are “ministerial in nature”); see also SEC v. Life Partners, Inc., 87 F.3d 536, 545 (D.C. Cir. 1996) (noting that “purely ministerial” functions do not meet the threshold for managerial efforts under the Howey test, and “[i]ndeed, quite the opposite is true”).

SEC v. Life Partners, Inc., 87 F.3d 536, 537-38 (D.C. Cir. 1996).

Id. at 538.

Id. at 545.

Id. at 545-46.

Id. at 548.

Native non-custodial staking service providers such as BTCS exert no discretion and have no authority to deviate from the terms of the service.

There is no obligation or discretion for the service provider to seek out the best opportunities and there is no need to build trust through disclosures mandated by securities laws. There is therefore no need for the types of disclosures securities laws require for an investor to understand how discretion would be used, such as the key people making the decisions, their backgrounds, the result of their decisions thus far, and their plans for the future. This type of information, designed to help investors decide whether to trust individuals to make good use of their money and generate profit, is not relevant in the context of BTCS native non-custodial staking services. Any protections consumers may need, such as clear terms of service and recourse under contract law if the terms are violated, fall outside the SEC’s authority and outside the scope of securities laws.

Lastly, we recognize and note to the Staff that other companies have used the same “staking-as-a-service” terminology to describe their custodial staking activities which is muddying the waters and doing a disservice to companies like BTCS, the crypto industry, the general public, and regulators. On June 6, 202318 we addressed our concern in a press release which we encourage the Staff to review as a supplement to our responses herein to better understand the critical differences in the business models.

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We note that in separate SEC complaints, the SEC identified Cardano, Tezos, Solana, Cosmos, Polygon, Axie Infinity, and NEAR Protocol crypto assets as securities. In future filings, please include a detailed discussion regarding the impact this may have on your business, financial condition and results of operation.

In future filings, we will include the following disclosure substantially in the form below:

“We note that in separate SEC complaints, the SEC has alleged several crypto assets we hold, specifically Cardano, Tezos, Solana, Cosmos,

Polygon, Axie Infinity, and NEAR Protocol are securities. The Company has conducted a detailed legal analysis which has led us to determine that certain crypto assets that are identified as securities by the SEC would not impact our business, financial condition, and results of operations.”

Rest of the answer

https://www.globenewswire.com/news-release/2023/06/06/2683119/0/en/BTCS-Addresses-Recent-SEC-Action-Against-Coinbase-and-Clarifies-its-Non-Custodial-Staking-Operations.html following analysis has led us to determine that certain crypto assets that are identified by the SEC as securities would not impact our business, financial condition, and results of operations as noted above in the form of future disclosure.

Law Identification of Certain Digital Assets and Impacts to Our Business the SEC views many, if not all, digital assets as securities19 as noted in a letter from the SEC’s Investor Advisory

Committee (“IAC”) to chairman Gary Gensler dated April 6, 2023, “We believe that virtually all, if not all, crypto tokens are securities and that they, as well as the platforms and custodians dealing with them, are subject to regulation under the federal securities laws to protect investors.”20 This analysis focuses on the activities the Company engages or may engage in with respect to certain digital assets (Cardano, Tezos, Solana, Cosmos, Polygon, Axie Infinity, and NEAR Protocol) that the SEC has alleged are securities.

Company through its validator node operations does not take custody of delegators’ staked assets. Accordingly, the laws and rules that relate to the custody of securities would not be implicated by the operation of non-custodial validator nodes even if the underlying assets being staked are deemed securities by a U.S. regulator or court. In addition, the laws and rules imposing securities custody obligations generally only apply to specific types of securities intermediaries and are designed to ensure that customer assets are protected in the event that such an intermediary fails.21 The Company’s operations do not involve custody and do not involve a participant that meets the definition of a broker-dealer or any other type of securities intermediary.

broker is defined as “any person engaged in the business of effecting transactions in securities for the account of others.”22

The definition of a broker is comprised of three components, all of which must be met in order to meet the definition: engaged in the business, effecting transactions, in securities.23 We assume for this analysis that a U.S. regulator has identified the supported digital asset as a security, and such alleged identification has not been overturned by the courts, therefore we focus on the first two elements of the broker definition.

See Gary Gensler, Remarks Before the Aspen Security Form (Aug. 3, 2021), available at https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03;

See also Jay Clayton, Testimony United States Senate Committee on Banking, Housing, And Urban Affairs, “Virtual Currencies:

The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission” (Feb. 6, 2018), available at https://www.banking.senate.gov/hearings/virtual-currencies-the-oversight-role-of-the-us-securities-and-exchange-commission-and-the-us-commodity-futures-trading-commission https://www.sec.gov/files/20230406-iac-letter-cryptocurrency.pdf

See the Customer Protection Rule, Rule 15c3-3 under the Securities Exchange Act of 1934, with respect to broker-dealer custody obligations, the Custody Rule, Rule 206(4)-2 under the Investment Advisors Act of 1940 with respect to investment adviser custody obligations, and Section 17(f) of the Investment Company Act with respect to custody obligations of registered investment companies.

15 U.S.C. § 78c(a)(4).

person who engages in regular activity involving securities transactions and who receives transaction-based compensation or who holds themselves out as a broker-dealer or as someone who will assist others with securities transactions might be deemed to be “engaged in the business.”24 There are a number of factors relevant to this analysis, which include: (i) the number of transactions and clients that are serviced, (ii) the total dollar value of securities transacted, (iii) the level of compensation associated with those transactions, and (iv) whether securities transactions were solicited.25 One of the key components to this analysis is the receipt of transaction-based compensation.

person involved in key points in the chain of distribution may be deemed to be “effecting transactions.”26 The focus is on the activities of the person or entity in the chain of distribution. The SEC and Federal courts have identified a variety of factors relevant to the analysis which include whether the person was: (i) actively soliciting or finding investors, (ii) providing advice regarding the merits of an investment, (iii) handling customer funds or securities, (iv) participating in the order taking or order routing process, (v) an employee of the issuer, (vi) paid commissions for the sale of securities rather than a salary, and (vii) involved in the negotiations between issuer and investor.27 transactions in supported native digital assets occurring in connection with rewards do not resemble the types of transactions in securities generally expected to be captured by the broker-dealer definition. They are not purchases or sales of securities from one securities holder to another. Instead, they are allocations of assets that occur programmatically by design whereby a protocol emits the asset and sends it to a pre-designated blockchain address. These transfers of assets occur in connection with the performance of a service to the relevant blockchain network and not because there has been a purchase or sale transaction. Accordingly, to treat native validator node operations as someone engaged in the business of effecting transaction in securities would be a significant expansion of the definition of broker as it is currently understood.

We note BTCS does not do any of the following: (i) provide advice regarding the merits of an investment, (ii) handle customer funds or securities,

(iii) participate in the order-taking or order-routing process, (iv) be an employee of the issuer, and (v) be involved in negotiations between issuer and investor. In addition, as described above the potential transactions at issue are programmatic transfers of digital assets that will happen without the involvement of the Company.

See, e.g., Cornhusker Energy Lexington, LLC v. Prospect St. Ventures, 2006 U.S. Dist. LEXIS 68959, 2006 WL 2620985, *6 (D.

Neb. 2006).

See, e.g., S.E.C. v. Hansen, 1984 U.S. Dist. LEXIS 17835, 1984 WL 2413, *10 (S.D.N.Y. 1984),

See, e.g., S.E.C. v. Bravata, 2009 U.S. Dist. LEXIS 64609, 2009 WL 2245649, *2 (E.D. Mich. 2009).

See, e.g., BondGlobe, Inc., 2001 SEC No-Act. Lexis 140 (Feb. 6, 2001) and SEC v. Collyard, 154 F. Supp. 3d 781, 787-90

(D. Minn. 2015).

Thus, we fail to see how the service BTCS provided involves “effecting transactions.” Further, Company validator nodes do not allow for the exchange or trading of any digital assets. Accordingly, even if one or more supported digital assets are deemed to be securities by a U.S. regulator or more importantly by the courts, the Company would not be obligated to register as a national securities exchange, or come within an exemption to such registration, nor would it be obligated to register as a transfer agent or clearing agency. BTCS’s role is more akin to that of a service provider that supplies computer hardware or software used in the securities transaction process.

Except as noted in response to comments #8 and #9 we do not believe that the identification of digital assets as securities will have any impact on our business.

Law Identification of Certain Digital Assets Effects on our Financial Condition.

will enhance our disclosure substantially in the form below to reflect that the SEC identifying certain digital assets as securities may impact the market price of those digital assets which could result in a decrease in the fair market value of such assets.

“The

SEC identifying certain crypto assets as securities may impact the market price of those crypto assets which could result in a decrease in the fair market value of such crypto assets. To the extent we hold crypto assets allegedly identified as securities by the SEC, it could have a material adverse effect on our business and our stock price.”

Law Identification of Certain Digital Assets Effects on our Results of Operations.

Even if a digital asset is identified as a security by the SEC the accounting for such digital asset for the purpose of financial reporting would be based on the definition of a security provided by FASB under its Accounting Standards Codification master glossary (“ASC”).

Provided, however, such codification would take into consideration SEC staff interpretations or Staff Accounting Bulletins, though we are currently unaware of any such SEC staff guidance with respect to utilizing fair market accounting for digital assets that are alleged to be securities. The ASC defines a security as follows (definition 2 is relevant to this analysis):

Company considered the characteristics listed above which admittedly are directed towards the traditional securities such as equities and bonds. The Company believes that certain of the characteristics may be present at the onset of certain digital asset initial coin offerings because the digital assets are more closely linked to the entity or small group of entities supporting the blockchain. However, over time, the goal is for the blockchain to be decentralized and, as a result, would not be linked to the profits of a single entity or small group of entities but rather the overall performance of the blockchain and its participants. As noted above, the Howey Test actually anticipates that the digital asset being tested may in fact start out as a security under the SEC regulations but then subsequently no longer meet the definition of a security under those same rules. For example, if the promoter in Howey sold the orange grove to a real estate developer three years after offering the securities, it obviously was not engaged in the sale of a security.

Company believes that the definition of a security used by the SEC is intended to determine what regulations are applicable (that is, what type of risk factors are present for disclosure and the appropriate level of sophistication of a potential buyer) rather than conclude upon the appropriate accounting for the digital asset. As a result, the Company believes that a conclusion that a digital asset meets the definition of a security pursuant to SEC identification does not automatically lead to a conclusion that the digital asset is a security pursuant to U.S. GAAP. Further, the Company believes that the determination of whether a digital asset meets the definition of a security under U.S. GAAP should take into account whether the digital asset will meet the definition of a security throughout the life of the digital asset. Said differently, a digital asset would only be considered a security under U.S. GAAP if it was determined that the digital asset will meet the definition over the life of the digital asset. In contrast, debt securities are considered securities until they are extinguished, mature, or are modified. Equity securities remain securities until they are redeemed or repurchased by the issuing entity. The notion that a digital asset will become less like a security as time passes and the blockchain decentralizes is not consistent with how instruments that meet the definition of a security behave. Usually, there is a specific event (maturity, modification, redemption, etc.) that leads to a change or reconsideration though in most instances the change is the expiration or replacement of the security.

Consequently, the Company believes that the fact that a digital asset may eventually not represent a participation in property or an entity (and actually is designed to become decentralized) is not consistent with the definition of a security pursuant to U.S. GAAP.

The Company believes that integral to meeting the definition of a security is the notion that the interest being analyzed will always meet the definition over its life.

additional support for this position, the Company considered a situation where a conclusion was reached where the digital assets meet the definition of a security pursuant to U.S. GAAP. Since these digital assets are not obligations, the digital assets would be considered some form of equity-like ownership and presumably would be carried at fair value with changes in fair value recorded in earnings. Based on this fact pattern, the Company notes the following:

● The accounting for an equity security does not contemplate instances where an equity security may no longer be an equity security. Generally, any features that are not consistent with an equity instrument are addressed at the inception of an equity security and accounted for accordingly. Consequently, a subsequent conclusion that an equity security no longer meets the definition of a security would appear to be an error (that is, the Company did not apply the appropriate accounting at the inception of the instrument) and, to the extent material, would result in a restatement. Accounting for the digital asset as an indefinite-lived intangible using the lower of cost or market measurement approach is more representationally faithful of the nature of the digital asset, until such time as FASB’s new guidance is adopted.

● Generally, the only time that digital assets are measured at fair value with changes in fair value recorded in earnings is when the reporting entity applies specialized industry accounting (that is, the reporting entity is either (a) a broker-dealer subject to the AICPA Broker Dealer Guide, or (b) meets the definition of an investment company). The Company is not subject to specialized industry accounting and does not meet the definition of an investment company as noted herein.

Company concluded that despite certain digital assets being identified as securities by the SEC they do not meet the definition of a security under U.S. GAAP pursuant to ASC because the decentralization of the blockchains will result in the participation of the digital assets no longer being linked to participation in property or an entity. As a result, and absent definitive guidance, the Company has taken a conservative approach of accounting for alleged digital asset securities consistent with its accounting for other digital assets

– indefinite-lived intangible assets recorded at the lower of cost or market subject to impairment testing.

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We note your current report filed on Form 8-K on June 29, 2023 indicating that on June 29, 2023, you listed your Series V Preferred Stock on Upstream. Please tell us whether U.S. investors are able to buy or sell these shares on Upstream. In that regard we note that your current report includes instructions for U.S. based Preferred Stock holders to deposit and trade their shares with Upstream. If U.S.

Rest of the question

investors are not permitted to buy and sell your Series V Preferred Stock on Upstream please explain to us, in sufficient detail, how U.S. investors are prevented from buying or selling on Upstream, and also explain how such prohibition is consistent with the above-noted instructions in your current report.

Upstream/MERJ

Exchange Ltd. (“MERJ Exchange”) has indicated to us that they do not solicit U.S. customers and do not allow U.S. customers to open securities trading accounts without being introduced by a licensed U.S. broker-dealer that has a direct contractual relationship with MERJ Exchange relating to the introduction of customers.

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They have further indicated to us that Boustead Securities, LLC (“Boustead

Securities”) has an introducing agreement with MERJ Exchange whereby customers of Boustead Securities are directly introduced to

MERJ Exchange and Boustead Securities acts as an agent for such customers. In our current report filed on Form 8-K on June 29, 2023 we indicate that “3. U.S. based Preferred Stock holders must also create an account with Boustead Securities (https://www.boustead1828.com/upstream) to deposit and trade their shares with Upstream.” Because we clearly indicate that a U.S. investor must create an account with

Boutstead Securities, a licensed broker-dealer, we believe our instructions are consistent with the restrictions.

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We note that Upstream prohibits U.S. investors from depositing, buying, or selling securities on Upstream unless they are introduced by a licensed broker-dealer. We also note that Upstream identifies Boustead Securities as an introducing broker. Please clarify the relationship between the introducing broker and Upstream and the functions expected to be performed by the introducing broker when it “introduces” U.S.

Rest of the question

investors to Upstream. For example, will the introducing broker transmit orders to Upstream on behalf of U.S. investors or will U.S. investors access Upstream directly after being referred to Upstream by the introducing broker? Further, will Upstream (or MERJ Depository or MERJ Exchange) carry customer accounts on behalf of the introducing broker?

MERJ

Exchange has indicated the following to us. Customers that have been onboarded by an introducing broker, such as Boustead Securities,

(i) must satisfy the introducing broker’s KYC, AML, and CIP policies, (ii) must have given the introducing broker prior approval to be introduced to MERJ Exchange, and (iii) are granted access to open and activate the trading account on Upstream directly from the introducing broker.

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Customers onboarded through an introducing broker may conduct trades directly on Upstream; however, all activities, including, but not limited to, deposits and withdrawals of cash and securities, orders entered, executed and not filled will be reviewed and monitored by the introducing broker. Securities deposited with Upstream (i.e. via MERJ Depository) are digitally reflected as MERJ

Depository Interests (“MDIs”) pursuant to the MERJ Rules. All MDIs held by each shareholder will be held in a segregated account of the shareholder which is linked to and administered through the Upstream application (“app”).

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Please explain why you believe MERJ Depository and MERJ Exchange are not required to register with the Commission as a broker or dealer, national securities exchange and/or clearing agency.

believe MERJ is not required to register with the Commission as a broker or dealer, national securities exchange and/or clearing agency based on the following representations they have made to us including that MERJ Exchange Ltd. is (i) an affiliate of the World

Federation of Exchanges (“WFE”), (ii) recognized by HM Revenue and Customs UK as a ‘Recognised Stock Exchange’,

(iii) a full member of the Association of National Numbering Agencies (“ANNA”) where MERJ Depository is responsible for assigning and registering ISIN and CFI identifiers to users, (iv) a Qualifying Foreign Exchange for

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OTC Markets in the United States, and (iv) a member of the Sustainable Stock Exchanges Initiative. MERJ Depository and MERJ Exchange are regulated in the Seychelles by the

Seychelles Financial Services Authority (https://fsaseychelles.sc/), an associate member of the International Association of Securities Commissions (IOSCO). In addition, the Seychelles is a full member of, and in good standing with, the Eastern and

Southern African Anti-Money Laundering Group (“ESAAMLG”), and is a participating jurisdiction recognized by the United States

Department of the Treasury under the Foreign Account Tax Compliance Act. Further, MERJ is a dealer of securities in its jurisdiction.

Rule 15a-6 allows certain foreign dealers to be exempt from registration with the Commission as a broker or dealer, national securities exchange and/or clearing agency. Specifically, Rule 15a-6 states that:

foreign broker or dealer shall be exempt from the registration requirements of sections 15(a)(1) or 15B(a)(1) of the Act to the extent that the foreign broker or dealer:

Effects transactions in securities with or for persons that have not been solicited by the foreign broker or dealer; or

Effects transactions in securities with or for, or induces or attempts to induce the purchase or sale of any security by:

(i)

A registered broker or dealer, whether the registered broker or dealer is acting as principal for its own account or as agent for others, or a bank acting pursuant to an exception or exemption from the definition of “broker” or “dealer” in sections 3(a)(4)(B), 3(a)(4)(E), or 3(a)(5)(C) of the Act (15 U.S.C.

78c(a)(4)(B), 15 U.S.C. 78c(a)(4)(E), or 15 U.S.C. 78c(a)(5)(C)) or the rules thereunder;

Exchange Ltd. is exempt from registration with the Commission as it: (i) complies with Rule 15a-6 (as MERJ is a dealer of securities),

(ii) does not solicit U.S. customers and (iii) does not allow U.S. customers to open securities trading accounts without being introduced by a registered U.S. broker-dealer that has a direct contractual relationship with MERJ Exchange Ltd. that acts as an agent for others.

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We note that you indicate that you “do not hold or take possession of any Delegator funds, crypto assets, or crypto asset rewards at any point during the Staking process,” but also note that you currently hold substantial amounts of “staked crypto tokens” on your balance sheet.

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Please clarify whether the “staked crypto tokens” held on your balance sheet are assets held for the benefit of your customers, or if such “staked crypto tokens” are digital assets staked for your own benefit.

“staked crypto assets” presented on our balance sheet reflect the carrying value of BTCS owned crypto assets held in BTCS owned digital wallets. There are no components of our blockchain infrastructure or staking-as-a-service strategies (including the operation of the StakeSeeker platform), whereby we take possession or custody, even temporarily, or hold any delegator funds, crypto assets, or crypto asset rewards. In our analysis of SAB No.

Rest of the answer

121, we confirm that BTCS does not hold, or engage other parties to hold on our Company’s behalf, any cryptocurrency assets for any customers, third parties, related parties, or entities. We therefore have determined that there are no third-party assets required to be included in our financial statements in accordance with SAB No. 121.

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Please provide a detailed legal analysis regarding whether the Company and its subsidiaries meet the definition of an “investment company” under Section 3(a)(1)(A) of the Investment Company Act. In your response, please address, in detail, each of the factors outlined in Tonapah Mining Company of Nevada, 26 SEC 426 (1947) and provide legal and factual support for your analysis of each such factor.

the Company’s business model has shifted over time it has not changed materially since late 2014 with respect to whether it meets the definition of an “investment company”. As a supplement to the analysis provided herein, we encourage the Staff, to review the SEC Staff comment letters and responses previously submitted and noted below. We believe there has been no relevant case law to render our prior responses or conclusions invalid and such prior responses are incorporated by reference.

On

November 29, 2017, the Company responded to a Staff comment letter (File No.

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333-219893)28 specifically comment #3 in which the Company addressed why it wasn’t an investment Company pursuant to Section 3(a)(1)(A) and Section 3(a)(1)(C).

January 18, 2018, the Company responded to the second comment letter29 addressing additional investment company concerns.

In response to comment #1, we included our analysis as to why certain crypto assets including Ethereum were not securities which ties directly to our response to comment #2 which is focused on the 40% threshold to be an investment company.

March 13, 2018, the Company responded to the third comment letter30 in which we expanded our responses to whether Ethereum was a security (comment #1) and the 40% test (comment #2).

May 16, 2018, the Company responded to the fourth comment letter (“2018 Staff Comment Letter #4”)31 (comment

#4) where we further expanded on why the Company is not an investment company pursuant to ASC 946.

July 25, 2018, the Company responded to the fifth comment letter32 (comment #6) where we further expanded on why the Company is not an investment company pursuant to ASC 946-10-15-6.

has no subsidiaries and is not an “investment company” within the meaning of Section 3 of the Investment Company Act of 1940, as amended (the “Act”). Section 3 of the Act provides two definitions of “investment company” that could potentially relate to BTCS. The first, Section 3(a)(1)(A), a subjective test, applies to those issuers that intend to be investment companies and that are, or hold themselves out as being, primarily engaged in the business of investing in securities. This definition does not apply to BTCS because BTCS is not and does not hold itself out as primarily engaged in the business of investing in securities.

https://www.sec.gov/Archives/edgar/data/1436229/000149315217013960/filename1.htm https://www.sec.gov/Archives/edgar/data/1436229/000149315218000708/filename1.htm https://www.sec.gov/Archives/edgar/data/1436229/000149315218003326/filename1.htm https://www.sec.gov/Archives/edgar/data/1436229/000149315218007267/filename1.htm https://www.sec.gov/Archives/edgar/data/1436229/000149315218010432/filename1.htm determining whether an issuer is engaged primarily in investing in securities, the SEC generally has analyzed the company using the five-factor test enunciated in Tonopah Mining Company of Nevada, 26 SEC 426 (1947) (the “Tonopah Test”). The five factors of the Tonopah

Test are: (i) the company’s historical development, (ii) its public representations of policy, (iii) the activities of its officers and directors, (iv) the nature of its present assets, and (v) the sources of its present income. Before we address the Staff’s request to address each of the factors outlined in Tonopah Mining Company of Nevada, 26 SEC 426 (1947) (“Tonopah”), which is readily distinguishable, we start our analysis with the seminal and only appellate case, SEC v National Presto Industries,

Inc., 486 F.3d 305 (7ht Cir. 2007) (“Presto”). Judge Easterbrook’s unanimous opinion gave each factor equal weight but more importantly stated that “the Commission thought in Tonopah that what principally matters is the beliefs the company is likely to induce in investors. Will its portfolio and activities lead investors to treat a firm as an investment vehicle or as an operating enterprise?” Id. at 316. The Court continued: Reasonable investors would treat Presto as an operating company rather than a competitor with a closed-end mutual fund.” Id.

this letter examines each of the five factors, it becomes quite clear that based upon the Company’s public filings and its website, reasonable investors must conclude the Company is an operating company actively engaged in the blockchain infrastructure business.

The Company has set forth below its analysis of each of the factors outlined in the Tonopah Test as follows:

i) Historical

Development. The Company is and has historically and consistently described itself in its public filings as a blockchain infrastructure focused company. As set forth in BTCS’s Form 10-K for the year ended December 31, 202233 (“2022 10-K”),

BTCS describes itself as “… an early entrant in the crypto asset (also referred to “cryptocurrencies”, “crypto”, or “tokens”) market and one of the first U.S. publicly-traded companies with a primary focus on blockchain infrastructure and staking.” Blockchain infrastructure refers to the systems supporting a blockchain network’s operations, determined by its consensus mechanism. Bitcoin’s blockchain utilizes Proof-of-Work, where miners (previously referred to by BTCS in its SEC filings as transaction verification services which is a more accurate description of the process despite not being widely adopted) use specialized ASIC hardware to solve cryptographic puzzles, ensuring network security through vast computational effort. Conversely, other blockchains use mechanisms like Proof-of-Stake or Delegated Proof-of-Stake, where validators, chosen based on specific blockchain protocol criteria, confirm transactions and create blocks. In BTCS’s Form 10-K for the year ended December 31, 201434 (“2014

10-K”), BTCS business description states “We currently operate a beta ecommerce marketplace which already accepts a variety of digital currencies, have designed a beta secure digital currency storage solution BTCS Wallet, and have been expanding our transaction verification services business, recently adding servers capable of generating bitcoins (i.e. bitcoin mining). In the short term, we believe our transaction verification services business will be a growing source of revenue for us.” Although the Company’s businesses shifted to securing blockchains other than Bitcoin’s blockchain; our activities have consistently had a core focus on blockchain infrastructure as disclosed in substantially all our SEC filings including substantially all our Form 10-K’s beginning with the 2014 10-K and through the 2022 10-K as well as 25 registration statements (including amendments) filed with the SEC between

2015 and 2021. The history of the Company demonstrates the Company has had significant and continuous business operations other than trading and investing in securities.

ii) Public

Representations of Policy. The Company has never represented that it is involved in trading and investing in securities or any other business that would result in it being an “investment company”. The Company has consistently stated in its filings with the SEC, press releases, other public statements, website, and advertising and marketing materials that its business is primarily focused on blockchain infrastructure and data analytics. For example, the Company’s

StakeSeeker website states “StakeSeeker is an innovative cryptocurrency dashboard and non-custodial staking-as-a-service platform that empowers crypto holders to manage and grow their digital assets through APIs and staking. The platform provides a unique solution for users to easily track and analyze the performance of their entire portfolio, regardless of where their crypto holdings are stored.” Stakeseeker is personal finance software albeit geared at crypto asset holders with a dashboard and data analytics tools. Therefore, it is important to distinguish between the functionalities of personal finance software and the activities associated with registered investment advisors or investment management (collectively

“Investment Management”). The following analysis details key factors of BTCS’s operations:

1. Definition

& Purpose:

○ Personal

Finance Software: This type of software primarily aids individuals in budgeting, tracking expenses, managing debts, evaluating their portfolio of assets (whether crypto or traditional), and providing a holistic view of their financial situation. Examples include Quicken, Mint, and YNAB.

○ Investment

Management: Involves the professional management of securities and assets to meet specific investment goals. Activities include deciding what securities to purchase or sell, analyzing market trends, and implementing trading strategies.

https://www.sec.gov/ix?doc=/Archives/edgar/data/1436229/000149315223010331/form10-k.htm https://www.sec.gov/Archives/edgar/data/1436229/000141588915001341/btcs10k_dec312014.htm

2. No

Discretionary Authority: Personal finance software doesn’t make actual decisions about buying or selling securities. It might provide users with information or historical trends and summaries, but the ultimate decision rests with the user. In contrast, a registered investment adviser under the SEC often has discretionary authority over client funds.

3. No

Advisory Recommendations: While personal finance software may offer generic financial information, historical trends, and summaries, or insights, it doesn’t typically provide personalized investment advice or recommendations based on an individual’s specific financial situation, objectives, risk profile, age, earnings, and goals.

4. Passive

Functionality: Personal finance software usually operates in a passive mode where it consolidates and displays information without proactively making investment decisions. This is different from active management where decisions about which securities to buy or sell are made regularly.

5. No

Fiduciary Duty: Investment managers owe a fiduciary duty to their clients, which means they must act in the best interests of their clients. Personal finance software, being a tool, doesn’t have such duties or responsibilities.

6. Generic

Analysis Tools: Some personal finance software may provide generic investment analysis tools, such as asset allocation visualizers or retirement calculators. However, these tools are based on broad assumptions and do not consider an individual’s specific financial situation, goals, or risk tolerance.

7. No

Direct Handling of Assets: Personal finance software simply aggregates and displays data.

It doesn’t handle, manage, or hold client assets or funds, which is a central activity of investment management.

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Please provide a detailed legal analysis regarding whether the Company or any of its subsidiaries meet the definition of an “investment company” under Section 3(a)(1)(C) of the Investment Company Act. In your response, please include all relevant calculations under Section 3(a)(1)(C), identifying each constituent part of the numerators and denominators, with values as of your most recent fiscal quarter ended.

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Please also describe and discuss their proposed treatment for purposes of section 3(a)(1)(C), as well as any other substantive determinations and/or characterizations of assets that are material to your calculations.

Model vs. Asset-Based Fees: Personal finance software typically operates on a subscription model where users pay for access to the software. In contrast, many investment managers charge fees based on a percentage of assets under management. Read in the reply ↗

Please provide us with a comprehensive accounting analysis addressing the impact of Staff Accounting Bulletin (“SAB”) No. 121 on your financial statements. Ensure your analysis addresses the applicability of the SAB to your business, your conclusion on treatment, how the impacted items are reflected in the financial statements and identify the specific line items including quantification of the amounts of the

Rest of the question

impact. In your response, clarify whether you hold, or engage other parties to hold on your behalf, any cryptocurrency assets for any customers, third parties, related parties or entities that are not included in the consolidated financial statements.

Control: Users retain full control over their financial data and decision-making when using personal finance software. There is no delegation of authority, which is a hallmark of Investment Management relationships. Read in the reply ↗

In future filings, please provide disclosure of any significant crypto asset market developments material to understanding or assessing your business, financial condition and results of operations, or share price since your last reporting period, including any material impact from the price volatility of crypto assets.

second definition of an “investment company” under the Act is Section 3(a)(1)(C), which is an objective test and applies to any issuer that is engaged in the business of investing, reinvesting, owning, holding or trading securities, and owns or proposes to acquire “investment securities” having a value in excess of 40% of the issuer’s total assets.

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For purposes of Section

3(a)(1)(C), the term “investment securities” includes “all securities except (A) Government securities, (B) securities issued by employees’ securities companies, and (C) securities issued by majority-owned subsidiaries of the owner which (i) are not investment companies, and (ii) are not relying on the exception from the definition of investment company in paragraph (1) or (7) of subsection (c).”

Company does not meet this portion of the definition as its assets are predominantly Ethereum which the Company and the blockchain community does not believe is a security. Further, Ethereum has been the second largest crypto asset for almost ten years and the

SEC has had ample time to identify it as a security to the extent it believes such. We note that On May 16, 2018 in Staff comment #1 of the 2018 Staff Comment Letter #4 the Staff stated “Please be advised that, at this time, we are unable to conclude that ether is not a security. With respect to ether and any new digital asset that you acquire or intend to acquire, we expect you will continue to monitor the value of your eligible assets to maintain appropriate amounts of your digital assets so that you are not required to register as an investment company or that you will promptly register as an investment company if your digital asset holdings exceed a permitted value.” The Company has complied with the Staff’s 2018 request to monitor its digital assets holdings and has maintained appropriate amounts of digital assets as noted in the calculations below, as such we are not required to register as an investment company.

further note that on April 19,2023, SEC Chair Gary Gensler testified before the House Financial Services Committee and when asked by

Committee Chairman Patrick McHenry (R-N.C.)35 “...is ether a commodity or a security?” Chair Gensler declined to provide a clear and direct answer. This further supports and supplements our response to comment #31 where the Staff notes “…the

Commission and staff have issued reports, orders, and statements that provide guidance on when a crypto asset may be a security for purposes of the U.S. federal securities laws.”. We also note that on June 14, 2018, William Hinman made the following remarks “And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.”36

Five years later the question still remains, does the Staff believe Ethereum is a security? This leads directly to the question of regulatory clarity and our disclosure around it as noted in our responses herein. If Ethereum is a security the SEC should take an official position so we may appropriately update our disclosure.

https://www.coindesk.com/policy/2023/04/19/sec-chair-gensler-declines-to-say-if-ether-is-a-security-in-contentious-congressional-hearing/ https://www.sec.gov/news/speech/speech-hinman-061418 of June 30, 2023, the Company had total assets (excluding cash and government securities) of $8,470,266 (with crypto assets carried at their lowest value “book value”). As a result, to qualify as an “investment company” pursuant to Section 3(a)(1)(C), the Company would need to own investment securities exceeding $3,388,106. The book value of Cardano, Tezos, Solana, Cosmos, Polygon,

Axie Infinity, and NEAR Protocol which the SEC has identified as securities (though those alleged identifications may be challenged and potentially negated if brought to the courts) totaled $2,298,240 or approximately 27% ($2.3 million / $8.47 million) of total assets so the Company does not qualify as an “investment company”. Further, the book value of the Company’s Ethereum was approximately

$5.17 million or 61.1% of the Company’s total assets (excluding cash and government securities) as such to the extent the SEC identified all crypto assets held by the Company (excluding Ethereum which is clearly not a security) the Company would still not meet the definition of an “investment company” under Section 3(a)(1)(C).

9. Please provide us with a comprehensive accounting analysis addressing the impact of Staff Accounting

Bulletin (“SAB”) No. 121 on your financial statements. Ensure your analysis addresses the applicability of the SAB to your business, your conclusion on treatment, how the impacted items are reflected in the financial statements and identify the specific line items including quantification of the amounts of the impact. In your response, clarify whether you hold, or engage other parties to hold on your behalf, any cryptocurrency assets for any customers, third parties, related parties or entities that are not included in the consolidated financial statements.

Response:

have included below our Technical Accounting Analysis in Response to SAB No. 121 applicability to BTCS Inc.

Introduction:

technical accounting analysis is conducted in response to SAB No. 121, with the purpose of determining whether the requirements of SAB

No. 121 are applicable to BTCS. We have thoroughly examined the guidance provided by SAB No. 121 and assessed our staking-as-a-service

(“StaaS”) model to ascertain its relevance to our operations.

I.

Scope of SAB No. 121:

SAB

No. 121 primarily concerns itself with the accounting treatment of an entity’s obligations related to safeguarding crypto assets for another party. These obligations are most relevant to custodial platforms and digital wallet providers that assume responsibility for the safekeeping of crypto assets.

II.

BTCS’s Staking-as-a-Service Model:

operates a non-custodial StaaS model, where individuals holding digital assets native to specific blockchain networks delegate their rights to validate transactions and participate in network governance to validator nodes maintained by BTCS. It is important to note the key characteristics of our StaaS model:

a. Non-Custodial

Nature: BTCS’s StaaS model is inherently non-custodial, meaning that individuals

(Delegators) maintain full custody and control over their digital assets throughout the delegation process. At no point during the delegation process, including the distribution of staking rewards, does ownership or custody of digital assets transfer to BTCS.

b. Native

Delegation (Native Staking): Most Proof-of-Stake (PoS) networks, which our StaaS supports, have native delegation capabilities embedded within the blockchain’s algorithmic logic. This means that delegation is facilitated directly by the blockchain network itself, eliminating the need for a third party like BTCS to take custody of assets.

c. Distribution of Rewards: The blockchain network manages the distribution of staking rewards to Delegators, bypassing the need for BTCS to be an intermediary in this process. Rewards are calculated and distributed by the blockchain network, ensuring transparency and security.

d. Absence of Formal “Customer” Relationship: Notably, a formal “customer” relationship between Delegators and BTCS is never established. BTCS does not receive any transfer of funds as part of the delegation process, and no funds are ever distributed by

BTCS to Delegators.

III.

BTCS’s StakeSeeker Platform:

addition to our StaaS model, BTCS operates the StakeSeeker platform, which is currently a free-to-use personal finance software and informational website. The StakeSeeker platform is designed solely as a cloud-based personal finance software for informational purposes and does not support any custodial functions. It serves as a proprietary crypto asset analytics and Staking-as-a-Service platform, providing users with information on our StaaS supported blockchains and offering instructions on how platform users can delegate their digital assets to BTCS-run validator nodes.

IV.

Conclusion:

Based on the characteristics outlined above and in consideration of the requirements of SAB No. 121, we conclude that the provisions and financial reporting obligations of SAB No. 121 are not applicable to BTCS. Our non-custodial StaaS model ensures that we do not undertake the responsibilities or obligations related to safeguarding crypto assets for others, which is the primary focus of SAB No. 121. We maintain our role solely as a ministerial entity in the delegation process.

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10. future filings, please provide disclosure of any significant crypto asset market developments material to understanding or assessing your business, financial condition and results of operations, or share price since your last reporting period, including any material impact from the price volatility of crypto assets.

Response:

Company acknowledges the Staff’s comment and in future filings will continue to include disclosures surrounding significant developments in the crypto asset market and their implications for our business and financial statements. Previously, we have incorporated various such disclosures, including those found in the “Government Oversight” section where we discussed the potential impact of recent SEC and other regulatory actions. Additionally, we outlined several risk factors under the section titled “Risks Related to Crypto Assets.” These risk factors were grouped under this section to specifically address both current and future matters related to crypto assets and their influence on our business. We plan to continue to provide our assessment through these disclosures and will update and enhance them as necessary to ensure a comprehensive understanding for our readers of the financial statements.

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In future filings, please include a more detailed description of the nature of your staking services, including the specifics of how the staking process operates on your StakeSeeker platform, how the arrangements with the users of your platform are structured and whether your platform only allows users to stake or delegate their crypto assets to your validator nodes or if it allows users to stake to third-party

Rest of the question

validators. In addition, please disclose the number of native tokens earned from staking your own crypto assets and disclose any revenues earned from fees in connection with your StakeSeeker service, separately discussing any revenue from users of your platform staking and delegating their crypto assets to your validator nodes, and, as applicable, to third-party validators.

have included a more detailed description of our staking operations in response to comment #17 below which will be included in our future filings. Additionally, in future filings, the Company will include the number of native tokens earned on each respective blockchain from staking our own crypto assets. We currently do not charge fees to delegators who stake to our non-custodial validator nodes, however, when we do, and to the extent material we will report such fees as a separate revenue line item.

Rest of the answer

Lastly, the Company does not earn any rewards or fees from users who delegate their crypto assets to third-party validators.

Read in the reply ↗

We note your disclosure that "bad behavior" can be penalized by "slashing" the validator's holdings and/or rewards. In future filings, please revise to briefly describe what you mean by "bad behavior" and "slashing." In addition, please disclose what will happen to the users of your platform that have staked their crypto assets to one of your validator nodes if you are penalized for "bad behavior," and, to the

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extent that the platform allows users to stake their crypto assets to other validators, what will happen if the third-party validators are penalized for "bad behavior."

plan to enhance our disclosure around slashing in future filings in consideration of your comments. We note that we have included additional information on slashing penalties in the Risk Factor - We may suffer losses due to staking, delegating, and other related services.

Related clarifying language in the referenced “OUR BUSINESS” section of our Form 10-K filing may include disclosure substantially in the form below:

“Many

PoS blockchain networks dictate requirements for participation in the relevant decentralized governance activity, and may impose penalties, or “slashing,” if the

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relevant activities are not performed correctly, such as if the node operator acts maliciously on the network, “double signs” any transactions, or experience extended downtimes. Slashing penalties can apply due to prolonged inactivity on a blockchain network and inadvertent errors such as computing or hardware issues, as well as more serious behavior such as intentional malfeasance. In the event on of our validator nodes are slashed by an underlying blockchain network, a portion of any crypto assets staked or delegated to our validator nodes at the time of the slashing, may be confiscated, withdrawn, or burnt by the network, resulting in permanent losses. Any penalties or slashing events could damage our brand and reputation, cause us to suffer financial losses, and adversely impact our business.”

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In future filings, please disclose whether you intend to hold or monetize your earned crypto assets, and disclose your policies related to the uses of the earned crypto assets. In addition, disclose how you monetize your crypto assets, including the exchanges you use and whether you have any agreements with any exchanges.

plan to enhance our disclosure around our strategies regarding earned crypto assets in future filings in consideration of your comments.

Our enhanced disclosure will include disclosure substantially in the form below.

primarily earn crypto assets through the operation of our non-custodial validator nodes, with the intention of enhancing our production of crypto assets in various blockchain networks.

Rest of the answer

While we have no formal policy our primary objective is to hold and restake these earned crypto assets for network security and additional production opportunities, we may, on occasion, sell a portion for cash to meet operational needs. Our primary cryptocurrency exchange is Kraken; however, we also have basic accounts with multiple alternative cryptocurrency exchanges and OTC desks. As of the reporting date, we have no exclusive agreements with any cryptocurrency exchanges nor do we maintain margin or other type accounts which could create additional liability for the Company. Our approach to crypto asset management remains adaptable to evolving market conditions and operational requirements.”

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In future filings, please disclose your custody procedures and arrangements by identifying your third-party custodians and describing the material terms of the agreements, including: • what portion of your crypto assets are held in hot wallets and cold wallets; • the geographic location where crypto assets are held in cold wallets; • whether any persons (e.g., auditors, etc.) are responsible for verifying the

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existence for the crypto assets held by the third-party custodian(s); and • a description of your custodian's insurance and the degree to which such policies provide coverage for the loss of your crypto assets.

plan to enhance our disclosure around our custody procedures regarding our crypto assets in future filings in consideration of the Staff’s comments. Our enhanced disclosure will supplement previous disclosure and will include disclosure substantially in the form below:

“BTCS prioritizes the secure storage of its crypto assets in cold digital wallets, with the goal of typically maintaining less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers between wallets and exchanges for sales or purchases.

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Occasionally, we may use hot wallets or move crypto assets to exchanges for operational or transactional requirements. Additionally, we regularly transfer crypto assets to more secure cold wallets when possible. Our cold wallet private keys are protected through a variety of methods, including key sharding, key encryption, and offline encrypted key storage in safety deposit boxes situated across multiple geographic locations. This multi-layered approach ensures the utmost security for our crypto assets.” amount of crypto assets at custodians (i.e. cryptocurrency exchanges) is immaterial and therefore disclosure on insurance and loss protection is not necessary. We include risks of self-custody in our Risk Factors. Additionally, we do not find it appropriate to explicitly disclose the role of the auditor in the various aspects of their audit procedures that must be performed in accordance with PCAOB and AICPA standards, which would include verification of the existence of reported assets, regardless of the nature of the assets. We do not anticipate including disclosure that our auditors are responsible for verifying the existence of crypto assets held by third-party custodians and in digital wallets, as this is assumed as a key component of any audit.

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In future filings, please revise to include a comprehensive breakeven analysis for your validator operations that compares the cost to earn one crypto asset with the value of the crypto asset.

blockchain infrastructure strategy centers on proof-of-stake (“PoS”) blockchains. It is important to note that the consensus mechanism for PoS blockchains significantly differs from that of proof-of-work (“PoW”) blockchains such as bitcoin’s blockchain. Particularly, PoW blockchains such as bitcoin require extremely large capital expenditures to purchase bitcoin miners and large data center and electricity expenses to run the bitcoin miners. Whereas PoS infrastructure doesn’t require the substantial capital expenses and operating costs associated with PoW mining.

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BTCS predominantly uses cloud-based infrastructure and can scale its operations with minimal additional operating costs.

contract, bitcoin miners invest millions of dollars on bitcoin mining machines and face ongoing expenses, including high electricity costs, with these machines being depreciating assets with short useful lives. Public bitcoin mining companies typically disclose the depreciation of their mining machines as a line item in the cost of revenue. It’s critical for investors in bitcoin mining companies to understand both the return on invested capital (which is not currently required to be disclosed) and the production cost per crypto asset, which most typically disclose. However, for BTCS our crypto assets are significantly different than bitcoin miners as an asset, they are not depreciating assets; instead, they are currently classified as indefinite-life intangible assets. Moreover, they will transition to being carried at fair market value with FASB’s proposed rule changes.

Given this contrast, we believe that providing a detailed analysis of the cost to generate a single cryptocurrency from our staking operations is not pertinent to the readers of our financial statement disclosures. Instead, we disclose the expenses related to operating validators, which are accounted for in our Statement of Operations. Therefore, when assessing the costs associated with generating staking reward revenues, we believe the calculation of gross profit serves as a more suitable and relevant measure.

summary, we regard the metric to be of limited relevance, such much so that we do not internally monitor it and do not perceive it to be a particularly useful indicator or offer substantial value to the investing public or our operations. Additionally, its calculation presents challenges due to the structure of our cloud service hosting expenses, which are determined by the compute services we employ rather than being blockchain-specific. There would be substantial cost and burden to reconfigure our infrastructure to calculate and disclose a metric that provides no insight or value to the Company or the investing public. Such activity would not be in the public interest or for the protection of investors.

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We note your disclosure on page 3 that "[t]he growth of both StakeSeeker's user base as well as the number and size of staked crypto assets by Delegators to company-run validator nodes is critical to [your] strategy and success." In future filings, please revise to disclose the size of your user base and the number and size of staked crypto assets.

Company acknowledges the Staff’s comment and in future filings will include disclosure substantially in the form below.

“As of October 6, 2023, there were 1,390 registered users on StakeSeeker. The following table sets forth the number of delegators and delegated tokens for our non-custodial validator nodes that have delegations:

Blockchain

Number of Delegators

Delegated

Crypto Assets

Cosmos

692

97,048

ATOM

Avalanche

523

48,698

AVAX

Near

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protocol

167

294,096

NEAR

Oasis

848,434

ROSE

Kava

28,427

KAVA

Akash

102

140,314

AKT

Tezos

128

XTZ

Kusama

700

KSM

Total

1,630 previously noted, customers can delegate to the Company’s non-custodial validator nodes without creating a StakeSeeker account or use StakeSeeker without delegating to our validator nodes.”

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In future filings, please provide greater details regarding your users and describe the use of digital engagement practices in connection with your platform, including, as examples, only, behavior prompts, differential marketing, game-like features and other design elements or features designed to engage with retail investors.

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Please also address the following, without limitation: • Specifically describe the analytical and technological tools and methods you use in connection with such practices and your use of technology to develop and provide investment education tools; • Clarify whether any of such practices encourage retail investors to invest in different products or change investment strategies; • Clarify whether you use any optimization functions (e.g., to increase platform revenues, data collection and customer engagement); • To the extent your use of any optimization functions may lead to potential conflicts between your platform and investors, please add related risk factor disclosure; and • Describe in greater detail your data collection practices or those of your third-party service providers. Please include a separate risk factor discussing the current and potential future regulatory risks associated with your use of digital engagement practices. In that regard, please consider the SEC's request for information and public comment on matters related to the use of such practices made on August 27, 2021.

Company acknowledges the Staff’s comment and in future filings will include the expanded disclosure to Item I “Our Business” substantially in the form below. We will also update our risk factors as appropriate.

“StakeSeeker is a personal finance software and education center with a comprehensive crypto dashboard for crypto asset holders to connect, monitor, track, and analyze their crypto portfolios across exchanges and wallets in a single analytics platform.

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The internally-developed dashboard reads user data from digital wallets and utilizes application programming interfaces (APIs) to read data from crypto exchanges and does not allow for the trading or custody of crypto assets. StakeSeeker’s Stake hub is an education center for users to learn how to earn crypto rewards by delegating to our non-custodial validator nodes. Crypto asset holders are able to delegate to our validator nodes without signing up for the StakeSeeker platform; conversely, crypto asset holders can delegate to validator nodes not operated by the

Company and sign up for StakeSeeker to utilize our software. The Company is not a broker-dealer or an investment advisor and does not provide any such related services.”

Company does not use behavior prompts, differential marketing, game-like features, other design elements or features designed to engage with retail investors nor do we take custody of customer funds or provide any investment advice, whether advice relates to securities or arrangements that are not securities. We provide directions on how to connect unaffiliated 3rd party wallets to our dashboard to monitor crypto assets and directions on how to delegate to our validator nodes. We disclose the estimated network staking reward for certain blockchains which are both determined and paid by the network, not the Company, and disclose the fee our validator nodes will receive for providing the ministerial service.

do not encourage retail investors to invest in different products or change investment strategies or give investment advice; we do not use any optimization functions (e.g., to increase platform revenues, data collection, and customer engagement). Our validator nodes are non-custodial and we have no conflicts of interest with customers. Customers retain custody of their assets and can re-delegate to non-Company validator nodes as they see fit. Upon opening an account with StakeSeeker we collect from users basic identifying information (e.g. name and email). For those who delegate to our non-custodial validator nodes but do not open an account with StakeSeeker we only have access to their public blockchain wallet address.

note that the SEC’s request for information and public comment on matters related to the use of such practices made on August 27,

2021, is directed toward “broker-dealer and investment adviser use of digital engagement practices”37. The Company is not a broker-dealer or an investment advisor and therefore it is not relevant to include a risk factor that does not apply to the business of personal finance software. Please refer to our response to comment #2 with respect to how our operations would be effective if certain crypto assets are securities and refer to our response to comment #7 for further analysis of the difference between personal finance software and Investment Management.

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In future filings, to the extent material, please discuss how the bankruptcies of companies in the crypto asset market and the downstream effects of those bankruptcies have impacted or may impact your business, financial condition, customers, and counterparties, either directly or indirectly.

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Clarify here whether you have material assets that may not be recovered due to the bankruptcies or may otherwise be lost or misappropriated.

have previously addressed the impact of recent bankruptcies of companies in the crypto asset market on our business, including our exposure to such counterparties, on page 3 of our Form 10-K for year-ended December 31, 2022, under the section headed “OUR BUSINESS”.

The following disclosure language was included in our filing:

https://www.sec.gov/news/public-statement/gensler-dep-request-comment self-custody of crypto assets by Delegators is a critical aspect of our non-custodial staking model.

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Recent headlines of bankruptcies, fraud, risk management failures, and misappropriation of customer assets in the crypto industry have raised concerns about the security of custodial exchanges and similar platforms. BTCS prioritizes the secure storage of its crypto assets in cold digital wallets, with the goal of typically maintaining less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers between wallets and exchanges for sales or purchases. Our exposure to companies such as FTX, Blockfi, and Celsius is limited to the negative impact these platforms had on the value of our assets in the crypto markets.” will consider your comments when enhancing our disclosures in future filings.

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In future filings, if material to an understanding of your business, please describe any direct or indirect exposures to other counterparties, customers, custodians, or other participants in crypto asset markets known to: • Have filed for bankruptcy, been decreed insolvent or bankrupt, made any assignment for the benefit of creditors, or have had a receiver appointed for them; • Have experienced excessive

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redemptions or suspended redemptions or withdrawals of crypto assets; • Have the crypto assets of their customers unaccounted for; and • Have experienced material corporate compliance failures.

refer to our response to comment #18 above detailing our previous disclosure of exposure to such referenced counterparties. If material to understanding our business we will consider your comments when enhancing our disclosures in future filings. Read in the reply ↗

We note your disclosure on page 3 that "BTCS plans to expand its PoS operations to secure other disruptive blockchain protocols that allow for Delegating." In future filings, please disclose how you select blockchain networks.

plan to enhance our disclosure regarding our selection of crypto assets for future procurement in consideration of your comments. Our enhanced disclosure in future filings will include the expanded disclosure substantially in the form below:

evaluate blockchain networks through various due diligence procedures, including consideration of blockchain quality, reward potential, and technical difficulty of running a validator node.

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Considerations of the quality of a blockchain include inspection of i) market and on-chain statistics, ii) liquidity, iii) potential blockchain utility, iv) history and milestones, v) growth and development roadmap, vi) use cases, vii) community interest, vii) quality of documentation, viii) decentralization, and ix) any other publicly available information.”

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We note that you stake crypto assets on your own validator nodes and on nodes run by third-party operators both directly or through crypto asset exchanges. In future filings, please disclose the material terms of your agreements with the third-party operators and identify both the third-party operators and the crypto asset exchanges on which you stake your crypto assets.

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In addition, please describe any material risks to you, either direct or indirect, due to excessive redemptions, withdrawals, or a suspension of redemptions or withdrawals of crypto assets on the exchanges that you use, and identify any material concentrations of risk and quantify any material exposures.

previously staked a negligible amount of crypto assets on Kraken’s exchange. However, over several reporting periods, we have completely divested from staking on any cryptocurrency exchanges. Consequently, we will no longer include the phrase “or through crypto asset exchanges” in our disclosures. Given that we consistently maintain less than 0.1% of our crypto assets on exchanges, this amount is considered immaterial.

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Consequently, we deem it unnecessary to provide additional disclosure regarding risks associated with crypto asset exchanges beyond what is already outlined in our Risk Factors.

Regarding the crypto assets we delegate to third-party operated nodes, it’s important to note that we do not enter into formal agreements or contracts with these third parties as part of the staking process. Similar to the non-custodial validator nodes we operate we simply delegate our crypto assets to third-party nodes, we retain full custody of our crypto assets in our digital cryptocurrency wallets. Therefore, our primary risk pertains to the security of our digital wallets and remains unaffected by third-party involvement.

noted in our other responses the delegation process is non-custodial, enabling us to earn rewards as a result of our participation in a blockchain consensus mechanism by locking our crypto assets on a respected network during the delegation period, without handing over custody (i.e. crypto private keys). Just like customers who delegate to our nodes we have the flexibility to delegate our crypto assets to any active validator node on a network and can adjust our delegation between nodes as needed. Since we retain our crypto asset (private keys) we have no risk with respect to excessive redemptions, withdrawals, or a suspension of redemptions or withdrawals of crypto assets from those nodes, or bankruptcy of the third-party party node operators.

believe disclosing the names or addresses of the third-party validator nodes to which we delegate our crypto assets would not provide meaningful value to readers of our financial statements, investors, or the general investing public, and would have no bearing on the assessment of our financial position and associated risks. Further, to the extent we seek to run validator nodes for blockchains where we currently delegate to third-parties bringing attention to our future competitors is a form of “free marketing” for them and is not in the best interest of the Company or its shareholders.

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We note your disclosure that your crypto asset platform is still in beta form. In future filings, please disclose its current functionality, your plans for future phases of the crypto asset platform, including a timeline and the estimated costs of developing the crypto asset platform.

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In this regard, we note your disclosure on page 6 that you intend to acquire additional crypto assets and to continue to develop and expand upon your crypto asset platform to enable it to offer a wider range of functions and availability for use with a greater variety of crypto assets. Please revise to disclose the functions you plan to add to your crypto asset platform, and how you intend to add these functions and services in compliance with the federal securities laws. In addition, please disclose the policies and procedures for compliance with the federal securities laws, related to the decision to add functions and crypto assets to your crypto asset platform.

plan to enhance our disclosure regarding the current functionality of our crypto asset platform in consideration of your comments. Our enhanced disclosure in future filings will include the disclosure substantially in the form below:

Company has addressed most of the open items with respect to its StaaS Platform and anticipates taking it out of beta on or prior to the end of the first quarter of 2024. The current functionality allows for crypto asset holders to connect, monitor, track, and analyze their crypto portfolios across exchanges and wallets in a single analytics platform.

Rest of the answer

In the future we may add support for additional blockchains and provide other analytic tools, we anticipate the costs associated to doing so would be in line with our historic research and development costs.” refer the Staff to our response to comment #2 under the heading “Securities Law Identification of Certain Digital Assets and

Impacts to Our Business” where we clarify that even if crypto assets are securities there would be no effect on our operations.

With respect to how we intend to add functions and services to comply with federal securities law we refer the Staff to the form of revised disclosure in comment #14 which we plan to include in future filings and to our analysis with respect to personal finance software in comment #7 under the heading “ii) Public Representations of Policy.” As noted in our response to numerous comments herein the Company does not plan to operate its business in such a way that results in it being either an “investment company” or engaged in Investment Management as defined herein.

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In future filings, please disclose whether you have experienced excessive removal of staked crypto assets, and, if so, explain the potential effects on your financial condition.

Company acknowledges the Staff’s comment, however, since we do not take custody of customer’s staked crypto assets the disclosure is not currently applicable to our financial condition. If customers choose not to delegate to our validator nodes there would not be any drop in our revenue since we currently do not charge any fees to delegators or earn any revenue from delegated assets. To the extent, that we charged fees and earned revenue from customers, and lost those customers we would also lose the related revenue.

Rest of the answer

A “removal” or unstaking of Company-owned and staked crypto assets would reduce revenue related to those staked crypto assets and to the extent such crypto assets are sold the Company would more likely than not book a gain on such sales as crypto assets are currently carried at the lowest possible value.

future filings, the Company will include a risk factor in its disclosure substantially in the form below.

“To the extent the Company successfully executes on its business plan and earns material revenue from customers who delegate their crypto assets to the Company’s validator nodes and subsequently experiences excessive removal of customer staked crypto assets from its validator nodes (i.e. a loss of customers) the Company would lose the related revenue which may have a material adverse impact on the

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We note that you own crypto assets. In future filings, to the extent material, please explain whether these crypto assets serve as collateral for any loan, margin, rehypothecation, or other similar activities to which you or your affiliates are a party.

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If so, identify and quantify the crypto assets used in these financing arrangements and disclose the nature of your relationship for loans with parties other than third-parties. State whether there are any encumbrances on the collateral. Discuss whether the current crypto asset market disruption has affected the value of the underlying collateral.

previously included an explicit disclosure in the “Management’s Discussion and Analysis” section on page 10 of our

Form 10-K for year-ended December 31, 2022. The following disclosure language was included in our filing: “Further, we do not issue or hold crypto assets on behalf of the third parties and have no exposure to the risks an exchange would have with respect to loans, rehypothecation and margin.” This statement remains accurate to date and the Company has no intention of using its crypto assets for such purposes.

Rest of the answer

We will consider the Staff’s comments when enhancing our disclosures in future filings to the extent applicable.

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Please enhance future filings to further disaggregate general and administrative, research and development, compensation and related expenses, and marketing expense to provide investors with a quantified understanding of significant underlying components of these line items that are material to your operations.

Rest of the question

Your current disclosures only provide explanation of the year-over-year change and the nature of and drivers of current year activity are unclear. Further, enhance your disclosures to clarify the impact of material changes on future operating trends. Refer to Item 303(b)(2) of Regulation S-K and Section III.D of SEC Release No. 33-6835.

will enhance our discussion and disclosure in future filings surrounding the Results of Operations by including a further disaggregation of expense lines and expanded assessment of drivers in line with the Staff’s comments. Read in the reply ↗

You disclose validator revenue as your only revenue item. However, you also disclose on page 15 that you generate revenue from staking transactions using your own validator nodes as well as staking on third party nodes, and that you also purchase crypto assets for non-staking activities. Further, your internally developed software disclosure on page F10 includes software that is sold, leased or marketed.

Rest of the question

Please provide us the following: • Clarify for us the quantified components of your revenue between validator transaction revenue, software revenue and any other revenues, for all periods presented. Include how much of each item includes any staking activity; • As the nature of your operations reflect significant variability and material changes from period to period, please tell us how you considered providing separate line items for revenue streams that are material to total revenue and or net (loss) income as required by Rule 5-03(b) of Regulation S-X; and • For each period presented, please tell us the amount of staking awards received, the amount of rewards passed through to users and the net amount that you have recognized. Also, tell us where amounts are presented in the statements of operations. Cash Flows, page 14

Company’s revenue is exclusively derived from staking activities, a consistent source of income throughout all reporting periods.

It is important to note that we have not generated any revenue from the StakeSeeker platform through subscriptions or marketing efforts, as full access is provided freely to all registered users. There are no advertising or marketing efforts made on the platform and we do not have any arrangement for the sale of user information.

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We acknowledge that any future revenue stemming from StakeSeeker will necessitate separate line items in accordance with Rule 5-03(b) of Regulation S-X.

that our revenue stream is currently limited to rewards from staking, whether on nodes operated by BTCS or third parties, there is no practical need to report separate line items in our financial statements. The nature of staking rewards is fundamentally similar, with differences primarily revolving around the logistical delegation process to a specific node.

It is important to highlight that tracking the rewards earned by third-party delegators staking with our nodes is not a relevant aspect to our business or our financial reporting because third-party rewards do not pass through us. As the node operator, we have no control over the determination or distribution of rewards, which are executed directly by the blockchain networks to the validator’s wallets.

Our nodes fulfill a ministerial role by facilitating the connection of delegated assets to the respective blockchain networks.

requested by the Staff the below table provides the production detail for each blockchain including both the rewards earned (native tokens) and total revenues recognized for each reporting period.

Token Rewards Production

FY 2021

FY 2022

Token

Token Rewards

USD Revenue

Ethereum (ETH)

406

$ 1,203,935

390

$ 768,992

Cardano (ADA)

-

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Your disclosure of cash provided by and/used in operating, investing and financing activities appears to repeat information already provided in the statement of cash flows. Please provide us with a quantitative and qualitative analysis of the drivers of the change in cash flows between periods and impact to future trends to provide a sufficient basis to understand changes in cash between periods.

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Refer to Item 303(b)(1) of Regulation S-K and sections 1.B. and IV.B. of Release No. 33-8350 and Release No. 33-10890 for guidance.

Company acknowledges the Staff’s comment and in future filings will enhance our discussion of drivers and trends in our cash flow analysis. Suggested additions to enhance our 2022 discussion of Cash Flows as part of the “Liquidity and Capital Resources” section are underlined in the following disclosure. We will evaluate future drivers and trends in future filings.

Flows used in operating activities was $0.8 million during Fiscal 2022 compared to $4.9 million during Fiscal 2021.

Rest of the answer

Operating cash inflows were generated from the sale of non-productive crypto assets of $2.6 million in Fiscal 2022 and $4.3 million in Fiscal 2021, contributing primarily to realized gains on crypto asset transactions of $0.5 million and $3.1 million in respective years. These sales are primarily of our remaining Bitcoin holdings by the end of 2022. Therefore, we do not anticipate any future material cash inflows from the sale of non-productive assets, as our blockchain infrastructure strategy focuses primarily on acquiring and staking productive proof-of-stake blockchain networks. Additional non-cash adjustments to our operating cash flows consisted of $14.9 million equity-based contingent bonuses granted to employees and our non-employee directors during Fiscal 2021 for the achievement of performance milestones compared to only $2.6 million equity-based compensation in Fiscal 2022. This is partially offset by the $13.3 million impairment loss on crypto assets in Fiscal 2022, compared to only $3.8 million Crypto Asset Impairment in Fiscal 2021. We anticipate similar levels of equity-based compensation in future years as reported in Fiscal 2022. Impairment charges are based on volatility in the crypto asset market and cannot be accurately predicted, however, we anticipate our impairment losses in Fiscal 2023 to be less than Fiscal 2022, given the acquisition activity and subsequent market declines that occurred in 2022.

used in investing activities was $9.0 million during Fiscal 2022 compared to $9.5 million for Fiscal 2021. Net cash outflow for investing activities was used primarily for the purchase of crypto assets for blockchain infrastructure operations. We anticipate purchase activity to decrease in 2023 as we focus our strategies on technical developments. Fiscal 2022 and Fiscal 2021 included large purchases of productive crypto assets to build our blockchain infrastructure operations.

provided by financing activities was $10.5 million during Fiscal 2022 compared to $15.2 million for Fiscal 2021. The cash inflows from financing activities in Fiscal 2022 were primarily from $11.1 million of proceeds from sale of Common Stock pursuant to the ATM Agreement compared to $2.8 million in Fiscal 2021. This was partially offset by a one-time return of capital distribution of $631,000 made to record holders as of March 17, 2022. The Company has plans to continue to raise proceeds from the sale of Common

Stock to fund operations as needed.

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Tell us what market(s) you use to value the cryptocurrencies you are entitled to receive for each individual cryptocurrency. Tell us whether this market is your principal market or exchange, or in the absence of a principal market, the most advantageous market under ASC 820-10-35-5. If so, tell us how you made the determination(s). If not, tell us why not.

Pricing

Sources - We derive market prices for all our cryptocurrencies from coinmarketcap.com. Our choice of coinmarketcap.com is based on a thorough due diligence process, which established it as the most reliable source for timely and accurate crypto token price data across our entire token holdings. Unlike traditional asset pricing sources such as Yahoo Finance, Google Finance, and Bloomberg, coinmarketcap.com consistently offers daily coverage for all the assets we require. This includes real-time API pricing feeds, which are essential for our internal monitoring processes.

Rest of the answer

Notably, coinmarketcap.com real-time pricing is materially aligned with the bid/ask quotes we see listed on our primary exchange, Kraken.

Principal market – Kraken serves as our primary cryptocurrency exchange for both purchasing and selling cryptocurrencies. The Company has also previously executed transactions through a variety of secondary exchanges. Our intention is to continue using Kraken as our primary exchange due to its reliability and capabilities. Nevertheless, we retain the flexibility to conduct cryptocurrency transactions on all exchanges where we have accounts and may also evaluate alternate exchanges when and if necessary.

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We note your disclosures on pages 15, F-9 and F-14 that you record impairment losses when fair value falls below the carrying value of the crypto assets at any time during the period, as determined using the lowest U.S. dollar spot price of the related crypto asset subsequent to its acquisition. Please clarify if this is the lowest intraday price that you are using.

Company confirms that we utilize the lowest intraday price for recording of impairment loss. Our disclosure of “Significant Accounting

Policies” will be updated to be more specific to include the word “intraday” as follows:

Company will record impairment losses as the fair value falls below the carrying value of the crypto assets at any time during the period, as determined using the lowest intraday U.S. dollar spot price of the related crypto asset subsequent to its acquisition.” Read in the reply ↗

In future filings, to the extent material, please describe any gaps your board or management have identified with respect to risk management processes and policies in light of current crypto asset market conditions as well as any changes they have made to address those gaps.

future filings, to the extent material, we will address any material gaps with respect to risk management processes and policies in light of current crypto asset market conditions that have not been previously disclosed. We will continue to monitor the crypto market for events which may result in the need for additional disclosure. Read in the reply ↗

We note your risk factor disclosure that the legal test for determining whether a particular crypto asset is a security "evolves over time," and that the "SEC's views in this area have evolved over time." In future filings, please remove these statements as the legal tests are well-established by the U.S.

Rest of the question

Supreme case law and the Commission and staff have issued reports, orders, and statements that provide guidance on when a crypto asset may be a security for purposes of the U.S. federal securities laws. In addition, we note your disclosure that "[t]he SEC generally does not provide advance guidance or confirmation on the status of any particular crypto asset as a security." In future filings, please remove or revise this statement in light of the fact that the Commission has identified numerous crypto assets as securities. Because crypto assets may be determined to be Digital Securities, we may inadvertently violate the 1940 Act, page 20

plan to enhance our disclosure of risk of the potential that certain crypto assets may be determined to be securities in future filings in consideration of your comments. Our enhanced disclosure will include disclosure substantially in the form below and update for additional advancements during the reporting period.

SEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under the

U.S. federal securities laws.

Rest of the answer

The process of determining whether a specific crypto asset qualifies as a security involves a nuanced analysis open to interpretation, making the outcome uncertain and challenging to predict. Despite regulatory developments in this field, some ambiguity persists, as the identification of crypto assets as securities or otherwise can be a complex matter.

Moreover, based upon decided federal court cases, it appears that the federal courts of appeals and possibly the U.S. Supreme Court may ultimately settle what some see as murky legal issues.

Notably, the SEC has designated certain crypto assets as securities in the context of ongoing legal actions, such as those involving Ripple, Coinbase, and Binance. While there have been instances where the SEC has issued guidance, reports, and statements addressing this issue, the resolutions of ongoing enforcement actions and legal proceedings are pending, potentially leaving room for further clarification to be sought regarding the regulatory treatment of specific crypto assets.

Furthermore, the SEC’s Enforcement Division has recently demonstrated a readiness and commitment to pursue enforcement actions against businesses with a focus on crypto assets. These actions include allegations of failure to register transactions involving crypto assets under the federal securities laws, with the contention that such crypto assets should be considered securities.” note that while the SEC may identify certain crypto assets as securities the courts may inevitably hold a different view. By way of example, we note the recent court decision in which Ripple was deemed not to be a security following the initial distribution. We will continue to monitor court actions and revise our disclosure accordingly.

Because crypto assets may be determined to be Digital Securities, we may inadvertently violate the 1940 Act, page 20

Read in the reply ↗

In future filings please revise this risk factor and the Government Oversight section on page 6 given that in separate SEC complaints, the SEC identified Cardano, Tezos, Solana, Cosmos, Polygon, Axie Infinity, and NEAR Protocol crypto assets as securities. Our obligations to comply with the laws, rules, regulations, and policies, page 27

Company acknowledges the Staff’s comment and in future filings will include the revised disclosure in substantially the form below

(with additions to the previous disclosure underlined):

Company intends to acquire additional crypto assets and to continue to develop and expand upon its Digital Asset Platform to enable it to offer a wider range of functions and availability for use with a greater variety of crypto assets.

Rest of the answer

The Company currently owns and plans to expand its crypto asset holdings, both through staking its existing crypto asset holdings on PoS blockchain networks and potentially through other means. In order to avoid being classified as an inadvertent investment company under the 1940 Act, we actively focus, in consultation with legal counsel, on ensuring that our ownership of assets that are not considered securities under the Act always exceeds

60% of our total assets, excluding cash items. In separate SEC complaints, the SEC identified Cardano, Tezos, Solana, Cosmos, Polygon,

Axie Infinity, and NEAR Protocol crypto assets as securities. As a matter of practice the Company typically targets keeping in excess of 60% of the Company’s total assets (excluding cash and government securities) in Ethereum. Therefore, to the extent the SEC identified all crypto assets held by the Company excluding Ethereum as securities, the Company would still not meet the definition of an “investment company” under Section 3(a)(1)(C) of the 1940 Act. By doing so, we can avoid being subject to the regulatory requirements and oversight that apply to investment companies. The ownership of crypto assets including Digital Securities may change based on the definition of a security under the Securities Act of 1933 (the “Securities Act”) and applicable court decisions. The key definition is the term “investment contract” and what constitutes an investment contract.” obligations to comply with the laws, rules, regulations, and policies, page 27

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We note your disclosure on page 27 that "StakeSeeker utilizes geo-blocking in an effort to prevent its use by persons located in sanctioned jurisdictions, [and] if notwithstanding these efforts [y]our current or planned activities are found to constitute 'facilitating' or assisting the actions of non-U.S. persons that would be prohibited for U.S. persons to perform directly due to U.S. sanctions, . . .

Rest of the question

it could result in material negative consequences for us [you], including costs related to government investigations, harsh financial penalties, and harm to your reputation." In future filings, please identify the jurisdictions in which you offer your services and products, and the jurisdictions in which you use geo-blocking and any other steps to restrict access to your platform, services and products.

Company acknowledges the Staff’s comment and in future filings will enhance disclosure to include language substantially in the form below.

employs third-party software, Cloudflare, to automatically identify and restrict log-in attempts to the StakeSeeker platform from specific countries and jurisdictions, including Cuba, Iran, North Korea, the Russian Federation, Syria, and Venezuela. Any users detected from these regions will be redirected to a page informing them that their access has been restricted.

Rest of the answer

We actively monitor sanctioned jurisdictions to ensure that appropriate restrictions are maintained.”

Read in the reply ↗

We note your risk factor disclosure that there has been "limited precedence" set for financial accounting of crypto assets, and "it is unclear" how we will be required to account for crypto asset transactions in the future. Please revise for the appropriateness of your statements regarding official guidance for the accounting for crypto assets.

Rest of the question

We observe that the FASB codification is the source of authoritative generally accepted accounting principles and that there is codification guidance whose scope applies to your transactions.

Company acknowledges the Staff’s comment and will remove the following Risk Factor from future filings: “Since there has been limited precedence set for financial accounting of crypto assets, it is unclear how we will be required to account for crypto asset transactions in the future.” The Company is aware of FASB’s recent guidance pertaining to the accounting treatment of crypto assets, and our accounting policies align with current and will be updated for pending guidance appropriately. Read in the reply ↗

We note your disclosures on page F-9 of the various items that comprise your cost of revenue, including production costs for validation transactions on the network, rent and utilities for server node housing, hosting costs for cloud-based servers, and third-party fees for software maintenance and node operations.

Rest of the question

Please provide us the following: • Tell us why your statements of operations only disclose validator expense as your cost of revenue; and • Provide us a quantified disaggregation of these costs for the periods presented. including which activities include staking and quantification of such by item.

our Significant Accounting Policies note, we provide details concerning the components contributing to “Cost of revenues.”

These components are collectively summarized as “Validator expenses” in the Statement of Operations. These costs encompass the expenses associated with setting up, running, and upkeeping our validator nodes central to our blockchain infrastructure staking operations.

Rest of the answer

While transaction fees incurred as part of our digital asset transactions are included within our Costs of revenues, their magnitude is not significant enough to necessitate a separate line-item disclosure in the Statement of Operations. For enhanced transparency, we have presented a breakdown of the cost drivers associated with node monitoring, maintenance, and support in the table below, which we subsequently consolidate under “Validator expenses.”

Cost of revenues - drivers

2022

2021

Node server hosting costs

$ 258,704

$ 143,479

Third-party node maintenance fees

$ 156,031

$ 121,287

Crypto transaction fees

$ 11,705

$ 3,580

Total cost of revenue

$ 426,440

$ 268,346 do not believe that providing a detailed disaggregation of the cost of revenue is pertinent to the readers of our financial statements.

For PoW bitcoin miners the disaggregation of the cost of revenue is pertinent and absolutely necessary due to the relevance of the depreciation of bitcoin mining machines and electricity costs. However, as further detailed in our response to comment #15 these material cost components do not exist with PoS validation.

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We note your accounting policy for intangible assets and impairment under ASC 350 on pages F-9 and 15. Please tell us, and revise future filings as necessary, to address the following: • Confirm our understanding that the cryptocurrencies on your December 31, 2022 balance sheets are used in your staking transactions ("productive"), or held for investment ("non-productive"); • Tell us who has custody and control of

Rest of the question

your crypto assets; and • Provide us a roll-forward of your productive crypto assets to ensure that, for all years presented, all purchases, sales, impairments and other items are fully disclosed and explained from January 1 to December 31. Please provide a separate roll-forward for each individually significant crypto asset held in the periods presented.

our note titled “Crypto Assets Translations and Remeasurements” on page F-9, located within Note 3 - Summary of Significant

Accounting Policies, we distinguish between productive vs. non-productive crypto assets as follows: “The presentation of purchases and sales of crypto assets on the Statement of Cash Flows is determined by the nature of the crypto assets, which can be characterized as productive (i.e. purchased for purposes of staking) or non-productive.

Rest of the answer

The purchase of non-productive crypto assets and currencies are included as an operating activity, whereas the purchase of productive crypto assets and currencies are included as investing activities in accordance with ASC 230-10-20 Investing activities. Productive crypto assets that are staked with a lock-up period of less than 12 months are presented on the Balance Sheet as current assets. Staked crypto assets with remaining lock-up periods of greater than 12 months are presented as long-term other assets on the Balance Sheet.” of December 31, 2022, our balance sheet includes three line items related to crypto assets:

i.

assets – This category represents non-productive crypto assets that were acquired for purposes other than staking as well as

PoS crypto assets considered productive in nature but are not currently staked, such as rewards earned. Historically, our larger non-productive crypto asset balance primarily consisted of Bitcoin holdings.

ii.

Staked crypto assets (current assets) – This category includes productive crypto assets that are actively staked, earned as rewards from staking, or purchased for the purpose of staking, as part of our blockchain infrastructure strategy. These assets have a lock-up period of less than one year (typically no longer than one month on any respective blockchain network) and are classified as current iii.

crypto assets (other assets) – This category represents our staked Ethereum and rewards earned from our validator nodes. As of December 31, 2022, the liquidity for Ethereum rewards and staked Ethereum was not yet determined but was subsequently unlocked as part of Ethereum’s Shanghai upgrade in April 2023. We have since reclassified these assets as current assets due to their newfound liquidity.

Below, you will find a roll-forward of our crypto assets, which includes roll forwards of activity in both native tokens and USD.

Crypto Asset Activity (Native Tokens)

12/31/2020

Purchases

Rewards

Sales

12/31/2021

12/31/2022

Bitcoin (BTC)

Non-productive

111

(88 )

(90 )

Productive

2,674

5,017

8,098

(34 )

8,454

257,757

262,860

374

5,295

6,493

24,022

24,504

45,362

73,486

4,779

2,186

7,371

8,032

30,068

(33,810 )

7,280

3,584

(3,645 )

3,067

3,072

78,046

96,318

67,114

382,316

480,825

2,010

2,073

14,054

17,178

50,584

51,103

(51,201 )

24,637

42,030

Livepeer (LPT)

9,111

(9,111 )

241,219

290,909

992

69,857

74,177

349,850

359,607

101,030

107,405

73,732

74,702

Crypto Asset Activity (Book Value)

FY

Classification

Book Value

Realized

Gain (Loss)

Impairment

Bitcoin

(BTC)

$ 506,925

5,761,550

(4,274,491 )

3,054,418

(2,447,976 )

$ 2,600,426

(2,547,325 )

398,446

(451,547 )

Ethereum

(ETH)

$ 488,726

7,994,887

1,203,935

(1,044,565 )

$ 8,642,983

768,992

(42,944 )

11,446

(3,671,852 )

$ 5,708,624

Cardano

(ADA)

398,179

(139,652 )

$ 258,527

3,038

(198,387 )

$ 63,178

(KSM)

124,900

(43,604 )

$ 81,296

1,188,346

73,138

(1,200,537 )

$ 142,243

(XTZ)

84,722

2,501

(24,571 )

$ 62,651

154,533

7,048

(172,581 )

$ 51,651

Solana

(SOL)

303,769

(55,072 )

$ 248,697

198,916

20,428

(408,030 )

$ 60,011

Polkadot

(DOT)

200,000

(17,430 )

$ 182,570

669,999

35,658

(217,459 )

23,910

(663,818 )

$ 30,859

Terra

(Luna)

100,000

(19,032 )

$ 80,968

5,401

(86,369 )

(Atom)

50,000

171

(3,997 )

$ 46,174

2,674,664

214,217

(2,366,696 )

$ 568,359

Polygon

(Matic)

(31,638 )

$ 68,362

700,000

27,826

(634,895 )

$ 161,293

(Avax)

55,823

5,749

(11,381 )

$ 50,190

1,027,801

30,791

(925,818 )

$ 182,964

Algorand

(Algo)

928

(6,979 )

$ 43,948

115

(15,041 )

1,845

(30,867 )

Axie

Infinity (AXS)

1,401,197

385,101

(1,540,855 )

$ 245,443

Livepeer

(LPT)

249,220

(310,150 )

71,110

(10,180 )

(KAVA)

930,153

114,603

(879,330 )

$ 165,426

Band

Protocol (BAND)

1,500

(518 )

$ 982

Mina

(MINA)

49,986

2,594

(20,578 )

$ 32,002

Network (ROSE)

18,172

533

(6,660 )

$ 12,045

(AKT)

34,888

1,459

(18,354 )

$ 17,993

Protocol (NEAR)

152,330

1,512

(61,002 )

$ 92,840

Evmos

(EVMOS)

$ 995,651

$ 15,223,829

$ 1,213,283

$ (4,274,491 )

$ 3,054,418

$ (3,845,899 )

$ 12,366,792

$ 9,451,703

$ (3,132,919 )

$ 506,757

$ (13,348,874 )

$ 7,535,913 our custody procedures, please refer to our response to comment #14 for detailed information. We emphasize that our core principle in these procedures is as follows:

prioritizes the secure storage of its crypto assets in cold digital wallets, with the goal of typically maintaining less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers between wallets and exchanges for sales or purchases.”

Read in the reply ↗

We note you have crypto assets that are not staked and appear to be classified as nonproductive. Please tell us, and revise future filings as appropriate, to address the following regarding these assets: • Are all crypto assets including in the line item "crypto assets" on your balance sheet not staked and classified as non-productive; • What is the business purpose for holding crypto assets.

Rest of the question

Specifically provide whether they are held for sale in the ordinary course of business and the typical holding period for these assets; • Provide a roll-forward of your non-productive crypto assets to ensure that, for all years presented, all purchases, sales, impairments and other items are fully disclosed and explained from January 1 to December 31. Please provide a separate roll-forward for each individually significant non-productive crypto asset held in the periods presented; and • We note you disclose on page 14 that cash outflows from investing activities was "primarily for the purchase of crypto assets for blockchain infrastructure operations." Tell us how much of this outflow is for non-staking uses and provide quantification.

highlighted in our response to comment #36, our financial disclosures distinguish between staked (productive) assets and non-staked (non-productive) assets on the Balance Sheet. Specifically, we categorize staked assets as “Staked crypto assets” and assets that are not staked as “Crypto assets.” It is worth noting that historically, a significant portion of our non-productive crypto asset balance comprised our Bitcoin holdings.

Rest of the answer

Previously, we held Bitcoins as part of our “digital asset treasury” strategy, where both Bitcoins and Ethereum were acquired and held for sale in our ordinary course of business. However, in 2021, we had sufficient capital to resume our blockchain infrastructure efforts with a focus on PoS blockchains and consequently liquidated our Bitcoin holdings.

our Statement of Cash Flows, we categorize the “Purchase of non-productive crypto assets” as an operating activity. Only purchases of productive crypto assets for validating purposes are classified as investing activities. This presentation aligns with the conclusions drawn from a consultation we conducted in 2022 with the Staff of the Office of the Chief Accountant of the SEC (the “OCA”).

This consultation aimed to confirm the Staff’s views regarding specific aspects of our accounting treatment, including revenue recognition from digital asset staking activities, as well as the appropriate classification of cryptocurrency transactions within our

Statements of Cash Flows. These matters were addressed with the Staff as detailed in our confirming letters with the OCA dated April

28, 2021, and September 13, 2022, attached hereto as Schedule 2 and Schedule 3, respectively.

refer to the roll-forward of our crypto assets provided in response to comment #36, which includes roll forwards of activity in both native tokens and USD for all blockchain tokens, labeled respectively as “productive” or “non-productive”.

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We note your disclosure on page F-10 regarding your internally developed software accounting policy that addresses treatment of your software costs for software sold, leased or otherwise marketed under ASC 985-20 and your software costs for internally used software under ASC 350.

Rest of the question

We also note your disclosure on page 2 that in January 2023 you launched a beta version of StakeSeeker, your internally developed Digital Asset Platform. Please provide the following: • Tell us the total costs of developing this novel software, and any other material software developed; and • Provide us with how much of those costs were capitalized or expensed in each period presented, and how you determined each component.

StakeSeeker platform is currently still in a beta phase, during which BTCS’s development team is primarily focused on the finalization of underlying APIs and front-end integration of digital wallet activity and holdings data as well as numerous performance charts being integrated as a core components of the analytics platform.

Rest of the answer

The staking-as-a-service features are included in the beta, but the API driven reporting and user experience integration is still under development, seeking feedback from testing and private beta users.

Management has evaluated the development progress of its proprietary Digital Asset Platform and determined that the Platform has not reached the technological feasibility milestone, as the Company has not completed a version of Platform that contains essentially all the functionality and features of the final version and has not fully tested the version to ensure that it works as expected. As such, current development charges are being booked as a Research and Development (“R&D”) Expense on the Statement of Operations and are not capitalized.

associated R&D costs primarily consist of:

Pro-rated salary costs based on percentages of our employees time during each quarter, primarily our CTO and COO;

External developers utilized as contractors to work on front-end and back-end development of platform; and

Software costs associated with research and feature development on the platform.

scope of ASC 985-20 excludes software developed or obtained for internal use. The software being developed by BTCS will be and is used by third parties only through a hosted environment. The user will not have the contractual right to take possession of the software at any time during the hosting period. As such, based on the above guidance, the Company has applied the Internal Use model to account for developing its proprietary software.

Should the staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Brian S. Bernstein, Esq. or Michael D. Harris, Esq. of Nason Yeager Gerson Harris & Fumero, P.A., the Company’s legal counsel, at 561-686-3307, bbernstein@nasonyeager.com and mharris@nasonyeager.com.

Read in the reply ↗

We note your response to prior comment 1. We continue to consider your response and may have further comments.

Understood. Read in the reply ↗

Refer to your response to prior comment 2. In your response letter, you state that your business should be viewed as "more akin to that of a service provider that supplies computer hardware or software," and that you, therefore, do not engage with the crypto assets in such a way that the identification of crypto assets as securities will impact your business, financial condition and results of operations.

Rest of the question

Further, you state that you have determined that how you account for the crypto assets you hold will not change as you believe that, "despite certain crypto assets being identified as securities by the SEC, they do not meet the definition of a security under U.S. GAAP pursuant to ASC because the decentralization of the blockchains will result in the participation of the digital assets no longer being linked to participation in property or an entity." In future filings, please add risk factor disclosure addressing the risks and limitations of your determinations, including that they are risk-based judgments and not a legal standard or determination binding on any regulatory body or court. Also address the risks to your business, financial condition and results of operations if a regulatory body or court finds that your conclusions are incorrect.

The

Company acknowledges the Staff’s comment and in future filings will include an expanded disclosure and risk factor substantially in the form below.

Securities and Exchange Commission

Division of Corporation Finance

Office of Crypto Assets

January 31, 2024

“We note that in separate SEC complaints, the SEC has alleged several crypto assets we hold, specifically Cardano, Tezos, Solana, Cosmos,

Polygon, Axie Infinity, and NEAR Protocol are securities.

Rest of the answer

The Company has conducted a detailed legal analysis which has led us to determine that certain crypto assets that are identified as securities by the SEC should not impact our business, financial condition, and results of operations. Provided, however, if over 40% of our assets are considered securities excluding cash we may be considered a 1940 act company (see the risk factor on page 20 of our Annual Report on Form 10-K). Further, the aforementioned assessment is risk-based judgments and not a legal standard or determination binding on any regulatory body or court. To the extent a regulatory body or court finds that our conclusions are incorrect, we may seek to cease certain of our operations. Any such action may adversely affect an investment in us.”

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We note your response to prior comment 8 and reissue in part. In your response, please (i) include your calculation under section 3(a)(1)(C) of the Investment Company Act, identifying each constituent part of the numerator and denominator and (ii) identify the assets that you treat as “cash items” for purposes of your analysis. Business

table below details, as of June 30, 2023, the crypto asset holdings supporting our response to prior comment 8, utilizing the impaired book value of our crypto assets (as opposed to the fair market value). The cash items excluded from the “Total Assets” figure consists only of USD cash deposits held in Company checking accounts. Upon request we can provide additional calculations for other periods but note that the results are similar.

Crypto

Asset

Book

Value

% of Total Assets (excl.

Rest of the answer

Cash)

Ethereum

(ETH)

5,176,274

61 %

Cardano

(ADA)

60,686

1 %

(a)

Kusama

(KSM)

140,203

2 %

Tezos

(XTZ)

17,533

0 %

Solana

(SOL)

62,569

Polkadot

(DOT)

33,442

Cosmos

(ATOM)

1,665,976

20 %

Polygon

(MATIC)

165,870

Avalanche

(AVAX)

187,050

Axie

Infinity (AXS)

236,126

3 %

Kava

(KAVA)

167,948

Band

Protocol (BAND)

948

Mina

(MINA)

30,562

Oasis

Network (ROSE)

105,908

Akash

(AKT)

19,573

NEAR

Protocol (NEAR)

89,480

Evmos

(EVMOS)

25,888

Total

8,186,036

97 %

Assets (excluding Cash)

$ 8,470,266

(b)

Threshold:

Total assets x 40% test

$ 3,388,106

- Assets identified as securities by SEC

Read in the reply ↗

Refer to your response to prior comment 11. In future filings, please include a more detailed description of the nature of your staking services, including the specifics of how the staking process operates on StateSeeker's Stake Hub.

Rest of the question

In this regard, we note your disclosure on page 3 that "StakeSeeker’s Stake Hub is central to BTCS’s growth strategy, allowing users to Delegate their crypto assets to the Company’s validator nodes." Disclose how the arrangements with users of the platform are structured, and clarify whether your platform only allows users to stake or delegate their crypto assets to your validator nodes or if the platform allows users to stake to third-party validators using Stake Hub. In this regard, we note your response to comment 17 in which you say that "crypto asset holders can delegate to validator nodes not operated by the Company and sign up for StakeSeeker to utilize [y]our software." Also, in future filings, please include the Token Rewards Production table you include in response to comment 26. To the extent that you do not earn revenues from certain users or for certain services, so state in future filings. In this regard, we note your response to comment 9 that "BTCS operates the StakeSeeker platform, which is currently a free-to-use personal finance software and informational website."

Company acknowledges the Staff’s comment and in future filings will include the expanded disclosure to substantially in the form below.

“The

Company’s internally-developed “StakeSeeker” platform is a personal finance software and education center with a comprehensive crypto dashboard for crypto asset holders to connect, monitor, track, and analyze their crypto portfolios across exchanges and wallets in a single analytics platform.

Rest of the answer

The StakeSeeker dashboard reads user data from digital wallets and utilizes application programming interfaces

(APIs) to read data from crypto exchanges and does not allow for the trading or custody of crypto assets. StakeSeeker’s Stake Hub functions as an educational center, offering users guidance on the delegation of their crypto assets to our non-custodial validator nodes, along with the ability to monitor such delegation activities through data analysis. StakeSeeker does not provide or facilitate direct, asset delegation or transaction execution on our platform. Stake Hub’s primary role is to offer instructional support and tracking capabilities. There is no active process for asset delegation through the Stake Hub dashboard; it is primarily a monitoring tool. Crypto asset holders are able to delegate to our validator nodes without signing up for the StakeSeeker platform; conversely, crypto asset holders can delegate to validator nodes not operated by the Company and sign up for StakeSeeker to utilize our software. The StakeSeeker platform is currently free-to-use for registered users, and as such does not currently generate any revenue. The Company is not a broker-dealer or an investment advisor and does not provide any such related services.”

Refer to tables presented in response to Comments #12 and #13 for details of the Token Rewards Production table which we plan to incorporate in future filings under the “Company Overview” section of MD&A.

Read in the reply ↗

Refer to your response to prior comment 14. In future filings, please clarify that you selfcustody your crypto assets, disclose what portion of your crypto assets you hold in hot wallets and cold wallets, whether you hold your private keys in cold storage and whether you have insurance that covers the loss of your crypto assets. In this regard, we note the first and second risk factors on page 28.

We plan to enhance our disclosure around our custody procedures regarding our crypto assets in future filings in consideration of the Staff’s comments. Our enhanced disclosure will supplement previous disclosure and will include disclosure substantially in the form below:

“BTCS prioritizes self-custody of its crypto assets through secure storage of the majority of its crypto assets in cold digital wallets, with the goal of typically maintaining less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers between wallets and exchanges for sales

Rest of the answer

or purchases. Occasionally, we may use hot wallets or move crypto assets to exchanges for operational or transactional requirements. Additionally, we regularly transfer crypto assets to more secure cold wallets when possible.

As of December 31, 2023, [●]% of BTCS’s crypto assets were held in cold storage wallets and [●]% of crypto assets were held in other storage wallets.

Company currently does not maintain any insurance policies that provide coverage for potential losses of crypto assets in cases of theft, lost keys, or any other events that might lead to the loss of private keys or crypto assets held within our secure digital wallets.

cold wallet private keys are protected through a variety of methods, including key sharding, key encryption, and offline encrypted key storage in safety deposit boxes situated across multiple geographic locations. This multi-layered approach ensures the utmost security for our crypto assets.”

Read in the reply ↗

Refer to your response to prior comment 17. In future filings, please disclose how you calculate the estimated staking rewards that you include on your platform.

Company acknowledges the Staff’s comment and in future filings will include the expanded disclosure substantially in the form below.

estimated staking rewards, expressed as the Annual Percentage Reward (APR), as displayed on StakeSeeker’s Stake Hub and our StakeSeeker website (www.stakeseeker.com), are determined using the most recent network data obtained through API data pulls from www.stakingrewards.com, a reputable and leading third-party blockchain data provider.

Rest of the answer

To ensure accuracy and consistency, BTCS conducts periodic checks to validate the APR data obtained against the data reported on each respective blockchain network’s blockchain explorer. Footnotes on StakeSeeker’s

Stake Hub and website state that the APR presented is not guaranteed and does not include StakeSeeker’s validator fee. The figures are provided for informational purposes and are subject to change based on the dynamics of the underlying blockchain networks.”

Read in the reply ↗

Refer to your response to prior comment 22. Please revise to disclose the functionality of Stake Hub on your Stateseeker platform. In addition please describe your policies and procedures for ensuring that your business operations are in compliance with the federal securities laws related to the decision to add functions, services and crypto assets to your crypto asset platform.

to enhanced disclosures surrounding StakeSeeker in responses to comment #4 and #6 above. We would like to draw your attention specifically to the disclosure language that states, “StakeSeeker does not provide or facilitate direct, asset delegation or transaction execution on our platform. Stake Hub’s primary role is to offer instructional support and tracking capabilities.

Rest of the answer

There is no active process for asset delegation through the Stake Hub dashboard; it is primarily a monitoring tool.” believe that our disclosures effectively convey that StakeSeeker is a free-to-use dashboard designed exclusively for monitoring crypto asset holdings and transactions. Therefore, the additional monitoring capabilities for crypto assets do not inherently raise compliance concerns, irrespective of the regulatory classification of securities. For further insights, we invite you to review our response to the previous comment #7, where we elaborated on our analysis regarding personal finance software.”

Read in the reply ↗

Refer to your response to prior comment 31. In future filings, please revise to balance the proposed disclosure by, for example, disclosing that the legal tests to determine whether a crypto asset is a security has been established by the U.S.

Rest of the question

Supreme Court case law and that the Commission and staff have issued reports, orders, and statements that provide guidance on when a crypto asset may be a security for purposes of the U.S. federal securities laws. In addition, please explain what you mean by the statement that refers to "murky legal issues."

In consideration of your comment, we have updated our enhanced disclosure for future filings to be more balanced by removing perspective and being factual. Specifically, the following language was removed “what some see as murky legal issues” is being replaced with a clearer and factual statement of “unresolved legal issues.” Our enhanced disclosure will consist of information substantially in the form presented below, and will be updated to reflect additional advancements made during the reporting period.

SEC and its staff have taken the position that certain crypto assets fall within the

Rest of the answer

definition of a “security” under the

U.S. federal securities laws. Legal tests to determine whether a crypto asset is a security have been established by the U.S. Supreme

Court case law and the SEC has issued reports, orders, and statements that provide guidance on when a crypto asset may be a security for purposes of the U.S. federal securities laws. The process of determining whether a specific crypto asset qualifies as a security involves a nuanced analysis open to interpretation, making the outcome uncertain and challenging to predict.

Despite regulatory developments in this field, some ambiguity persists, as the identification of crypto assets as securities or otherwise can be a complex matter. Notably, the SEC has identified certain crypto assets as securities in the context of ongoing legal actions, such as those involving Ripple, Coinbase, and Binance. The resolutions of ongoing enforcement actions and legal proceedings are still pending, potentially leaving room for further clarification to be sought regarding the regulatory treatment of specific crypto assets.

Moreover, based upon decided federal court cases, it appears that the federal courts of appeals, and possibly the U.S. Supreme Court, may ultimately settle unresolved legal issues with respect to the identification of certain crypto assets as securities.”

Note

3. Summary of Significant Accounting Policies

Read in the reply ↗

We note your response to prior comment 37. Please tell us, and revise future filings as requested, to address the following: • Quantify rewards earned for productive assets included in "crypto assets" and "staked crypto assets;" and • Your accounting for all three of your crypto line items, including your accounting for them as productive/non-productive characterizations, staked/non-staked, and their relevant

Rest of the question

lock-up periods.

plan to enhance our disclosure regarding Accounting Treatment of Crypto Assets a in future filings in consideration of the Staff’s comments. Our enhanced disclosure will supplement previous disclosure and will include disclosure substantially in the form below:

“In our Balance Sheets, we classify crypto assets as either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish their nature within the respective balances. Staked crypto assets are presented as current assets if their lock-up periods are less than

12 months, and as long-term other assets if the lock-up extends beyond one year.

Rest of the answer

The majority of our crypto assets are staked, typically with lock-up periods of less than 21 days.

classification of purchases and sales in the Statement of Cash Flows is determined based on the nature of the crypto assets, which can be categorized as ‘productive’ (i.e. acquired for purposes of staking) or ‘non-productive’ (e.g. bitcoin). Acquisitions of non-productive crypto assets are treated as operating activities, while acquisitions of productive crypto assets are classified as investing activities in accordance with ASC 230-10-20 Investing activities. Productive crypto assets staked with lock-up periods of less than 12 months are listed as current assets in the ‘Staked Crypto Assets’ line item on the Balance Sheet. Staked crypto assets with lock-up periods exceeding 12 months are categorized as long-term other assets. Non-productive crypto assets are included in the

‘Crypto Assets’ line item on the Balance Sheet.”

Based on the distinguishment between the different crypto asset line items, it is inherent to understand that staking rewards are only earned on “productive” “Staked crypto assets”. We believe our enhanced disclosures of staking rewards, as detailed in our responses to comments #12 and #13, provide sufficient disclosure quantifying staking reward activity.

Read in the reply ↗

We note your response to prior comment 37 and your disclosures on page 14 in your December 31, 2022 Form 10-K and page 27 in your September 30, 2023 Form 10-Q that you view your crypto as long-term holding that is not held for regular trading, and that the Company’s cash position and liquid crypto assets are sufficient to support its daily operations over the next twelve months.

Rest of the question

As most of your crypto assets are recorded as current assets on your Balance Sheet, please reconcile these disclosures for us and tell us how your classification of cryptocurrencies as current assets is consistent with the definition of current assets in ASC 210-10-20.

sentence in question is: “We view our crypto assets as long-term holdings and we do not plan to engage in regular trading of crypto assets other than for meeting operational cash needs.” This sentence has been included in our filings to emphasize that we do not actively trade crypto assets as part of our strategy. In our “Liquidity” section, we make it clear that our crypto assets may have short lock-up periods, which could make them temporarily unavailable for immediate cash needs.

Rest of the answer

However, we believe that, overall, these assets can be liquidated in an orderly fashion within a reasonable timeframe.

plan to update our disclosure substantially in the form below:

“Certain of our staked crypto assets may be locked up for varying durations, depending on a the specific blockchain protocol, and we may be unable to unstake them in a timely manner in order to liquidate to the extent desired. Lock-up periods for our staked crypto assets range from several hours to six months.”

It’s important to note that only one of our crypto assets, Avalanche, has a self-designated lock-up period of six months. All other assets typically have lock-up periods of a maximum of 21 days.

Since our crypto assets are productive inputs into our operations they typically have infrequent turnover, however, despite holding them for the long term we believe they still meet the definition of current assets under ASC 210-10-20 due to their short lock-up periods and available liquidity. This classification supports them as a current source of liquid assets for the Company.

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We note your disclosure on page 9 that you hold stablecoin, but the accounting for it is unclear. Please tell us, and revise future filings, to address the following: • Quantify stablecoins that are USDT (Tether) and USDC (USD Coin); • Clarify your accounting for USDT and USDC specifically whether you believe each coin is an indefinite-lived intangible asset under ASC 350 or financial asset under ASC 825; and • Tell

Rest of the question

us whether you have a Circle Mint account and whether you can redeem USDC for US fiat.

entire “Stablecoins” balance reported on our balance sheet as of 9/30/2023 is composed of USDT (Tether). The balance as of

9/30/2023 was approximately $30,000, and we have never held, nor intend to hold, a material balance of USDT or any other stablecoin at any point in time. During the year, we purchased immaterial amounts of USDC on Kraken’s exchange to pay one of our developers for a short duration of time.

will clarify in our disclosure that we account for our stablecoins as indefinite-lived intangible assets in accordance with ASC 350,

Intangibles –Goodwill and Other.

Rest of the answer

However, given the consistent peg to $1.00 USD, we do not assess our immaterial USDT holdings for impairment each reporting period.

do not have a Circle Mint account. As noted above, the small amount of USDC we purchased during 2023 was used to pay invoices for one of our developers.

Read in the reply ↗

Please tell us, and revise future filings, to quantify revenue from running your own crypto asset validator nodes as well as revenue by staking crypto assets on nodes run by thirdparty operators. Please quantify in all periods presented. Please also tell us whether and to what extent you have generated any revenue from your Staking-as-a-service business.

plan to incorporate in our future filings, the following table detailing year-over-year comparison of total tokens and total USD revenue earned for each token in the current and prior year presented in our comparative financial statements. The tables distinguish between:

1) tokens we earn from staking to BTCS run validator nodes, and 2) tokens we earn from staking to unaffiliated third-party validator nodes.

Annual

Revenue Comparison

Earned from staking to BTCS validator nodes

FY

2022

2023

Token

Rewards

($USD)

390

$ 768,992

[ ]

$

(Atom)

15,200

$ 214,217

$ [ ]

49,690

$

Rest of the answer

114,603

824

$ 73,138

4,320

$ 2,594

-

$ -

6,376

$ 1,459

(Avax)

1,051

$ 30,791

970

$ 1,512

9,758

$ 533

3,620

$ 7,048

Terra

(Luna)

$ 5,401

Algorand

(Algo)

$ 115 earned from staking to BTCS validator nodes

$ 1,220,403 from staking to third-party validator nodes

17,392

$ 385,101

(Matic)

31,395

$ 27,826

407

$ 20,428

2,989

$ 35,658

5,102

$ 3,038 earned from staking to third-party validator nodes

$ 472,051

$ 1,692,454

ITEM

2. Managements Discussion and Analysis of Financial Condition and Results of Operations

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Please revise your quarterly crypto asset tables to disaggregrate revenue by the coin on which it is earned.

plan to incorporate the following tables in our future filings:

2023Q1

2023Q2

2023Q3

2023Q4

$ 108

5,980

$ 10,662

13,312

13,008

$ 10,394

12,500

$ [

]

273

$ 180

300

5,760

$ 1,440

2,880

$ 32,236

27,271

2,807

$ 2,851

2,671

$ 646

20,364

$ 30,287

26,321

1,022

$ 1,665

1,606

1,179

$ 435

385 tokens earned from staking to BTCS validator nodes

50,492

90,903

87,332

4,452

4,474

4,629

5,981

6,158

6,276

246

356

402

121

128

131

433

1,458 tokens earned from staking to third-party validator nodes

10,801

11,549

12,896

61,292

102,453

100,228

154,634

$

Rest of the answer

201,121

151,699

75,469

$ 109,787

106,982

11,735

$ 9,351

9,523

9,412

$ 4,960

6,416

3,837

$ 1,070

1,234

$ 5,862

2,016

1,045

$ 1,159

2,263

$ 8,403

1,196

$ 1,735

1,183

2,111

$ 2,841

2,050

1,269

$ 432

287

$ 260,708

$ 346,721

$ 283,654

40,028

29,313

23,755

6,737

5,057

3,676

2,531

2,581

2,860

1,503

1,957

1,898

124

399

$ 50,800

$ 39,032

$ 32,588

$ 311,508

$ 385,753

$ 316,242

Should the staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Brian S. Bernstein, Esq. or Michael D. Harris, Esq. of Nason Yeager Gerson Harris & Fumero, P.A., the Company’s legal counsel, at 561-686-3307, bbernstein@nasonyeager.com and mharris@nasonyeager.com.

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Refer to your response to prior comment 4. In future filings, please clarify what you mean by your disclosure on page 3 that "StakeSeeker’s Stake Hub is central to BTCS’s growth strategy, allowing users to delegate their crypto assets to the Company’s validator nodes" by disclosing how it is central to your growth strategy.

Rest of the question

Also, your response that StakeSeeker does not provide or facilitate crypto asset transactions, including the ability to delegate crypto assets to your validator nodes appears to be inconsistent with your disclosure on page 3 that StakeSeeker's Stake Hub allows users to delegate their crypto assets to your validator nodes. We also note that your website describes StakeSeeker as a secure non-custodial staking-as-a-service platform. Please advise. Additionally, if StakeSeeker does not provide or facilitate direct, asset delegation or transaction execution on your platform, please disclose the actual means by which users delegate crypto assets to your validator nodes.

We plan to include the following enhanced disclosure describing StakeSeeker, which we believe more explicitly clarifies its core features and functionalities as a non-custodial and non-transactional monitoring dashboard, in our upcoming Form 10-K, as well as in future filings, in consideration of the Staff’s comments:

“The

Company’s internally developed “StakeSeeker” platform is a personal finance software and education center with a comprehensive crypto dashboard for crypto asset holders to connect, monitor, track, and analyze their crypto portfolios across exchanges and wallets in a

Rest of the answer

single analytics platform. The StakeSeeker dashboard reads user data from digital wallets and utilizes application programming interfaces

(APIs) to read data from crypto exchanges and is non-custodial, meaning it does not allow for the trading or custody of crypto assets.

StakeSeeker’s Stake Hub functions as an educational center, offering users guidance on how to delegate their crypto assets to our non-custodial validator nodes, along with the ability to monitor such delegation activities through data analysis. StakeSeeker does not provide or facilitate direct, crypto asset delegation through its StakeHub, nor does it facilitate transaction execution on our platform.

Stake Hub’s primary role is to offer instructional support and monitoring capabilities. Crypto asset holders are able to delegate to our validator nodes without signing up for our StakeSeeker platform; conversely, crypto asset holders can delegate to validator nodes not operated by the Company and utilize our StakeSeeker software and data analytics. The StakeSeeker platform is currently free-to-use for registered users so is not currently generating revenue. The Company is not a broker-dealer or an investment advisor and does not provide any such related services. StakeSeeker operates exclusively as an informational and educational resource for the monitoring and analysis of crypto assets, with its non-custodial and non-transactional approach ensuring compliance with federal securities laws, thereby precluding any regulatory concerns as the platform continues to develop.” have removed the language cited in the Staff’s comment regarding StakeSeeker’s role in BTCS’s growth strategy, and replaced it with the following language in our upcoming Form 10-K:

“StakeSeeker provides a valuable analytical platform to crypto enthusiasts and strategically seeks to entice users with its features. One underlying strategic objective of the platform is to drive the expansion of Delegators to our validator nodes. The growth of the size of delegations is central to the scalability of BTCS’s StaaS business strategy.” further elaborate StakeSeeker’s role in BTCS’s “Growth Strategy” in the same named section under Item 1 –

Business of our upcoming Form 10-K as follows:

“Growth of Delegator Base and Assets: A critical component of our growth strategy is to increase the number of Delegators and crypto assets delegated to our validator nodes including our own. We plan to achieve this by: 1) acquiring more crypto assets and staking them to our nodes, and 2) enhancing the StakeSeeker platform’s capabilities as an educational center and analytical tool. We believe that leveraging

StakeSeeker’s capabilities to provide insights and guidance will foster trust and confidence among potential Delegators.”

In our upcoming Form 10-K, we’ve refined our business description by distinctly separating ‘Staking-as-a-Service’ from

‘StakeSeeker.’ This distinction clarifies our validator node operations and differentiates them from the StakeSeeker monitoring dashboard, emphasizing that these elements operate independently. Our validator nodes, central to our staking-as-a-service strategy, allow for third-party crypto asset delegation as part of our broader blockchain infrastructure. Conversely, StakeSeeker serves primarily as an informational and educational platform, offering insights into the asset delegation process. It provides guides to users on how they may delegate crypto assets from their private wallets, highlighting that such actions occur outside the StakeSeeker platform.

believe that our disclosures regarding StakeSeeker and our staking-as-a-service operations effectively convey the non-custodial nature of our business. Further, we believe that the information included on our Company website (www.btcs.com) as well as www.stakeseeker.com is consistent with the information disclosed in our SEC filings, including Form 10-K.

Read in the reply ↗

Refer to your response to prior comment 5. In future filings, please disclose whether you hold the private keys in hot or cold storage, and disclose the percentage held in each.

plan to include the following enhanced disclosure around our custody procedures regarding our crypto assets in our upcoming Form 10-K, as well as in future filings, in consideration of the Staff’s comments:

“BTCS prioritizes self-custody of its crypto assets through secure storage of the majority of its crypto assets in cold digital wallets, with the goal of typically maintaining less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers between wallets and exchanges for sales or purchases.

Rest of the answer

Occasionally, we may use hot wallets or move crypto assets to exchanges for operational or transactional requirements. Additionally, we regularly transfer crypto assets to more secure cold wallets when possible.

As of December 31, 2023, [●]% of BTCS’s crypto assets were held in cold storage wallets and [●]% of crypto assets were held in other storage wallets, including hot wallets.”

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Refer to your response to prior comment 6. We note that you obtain the data used to calculate the Annual Percentage Reward (APR) from www.stakingrewards.com. In future filings, please disclose how you use the data to calculate the APR. In addition, please disclose how frequently you conduct periodic checks to validate the data used to calculate the APR.

plan to include the following enhanced disclosure in our upcoming Form 10-K, as well as in future filings, in consideration of the Staff’s comments:

estimated staking rewards, expressed as the Annual Percentage Reward (APR), as displayed on StakeSeeker’s Stake Hub and our StakeSeeker website (www.stakeseeker.com), are determined using the most recent network data obtained through API data pulls from www.stakingrewards.com, a third-party blockchain data provider.

Rest of the answer

To ensure accuracy and consistency, BTCS conducts periodic checks to validate the APR data obtained against the data reported on each respective blockchain network’s blockchain explorer. Disclosure on StakeSeeker’s website clearly states that the APR presented is not guaranteed and does not include StakeSeeker’s validator fee. The APR figures are provided for informational purposes and are subject to change based on the dynamics of the underlying blockchain networks.”

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Refer to your response to prior comment 7. Please revise to describe your policies and procedures for ensuring that your business operations are in compliance with federal securities laws related to decisions to add functions and to add services and to determine the type and amount of crypto assets you hold.

refer you to our planned enhanced disclosure describing StakeSeeker that we have included in our response to Comment 1 above, which we believe more explicitly clarifies its core functionalities in our upcoming Form 10-K, as well as in future filings, in consideration of the Staff’s comments. Specifically, in consideration of the Staff’s comment 4, we highlight the following language excerpt from the disclosure language:

Company is not a broker-dealer or an investment advisor and does not provide any such related services.

Rest of the answer

StakeSeeker operates exclusively as an informational and educational resource for the monitoring and analysis of crypto assets, with its non-custodial and non-transactional approach ensuring compliance with federal securities laws, thereby precluding any regulatory concerns as the platform continues to develop.” believe that our disclosures effectively convey that StakeSeeker is a free-to-use dashboard designed exclusively for monitoring crypto asset holdings and transactions. Therefore, the additional monitoring capabilities for crypto assets do not inherently raise compliance concerns, irrespective of the regulatory classification of securities.

Separate from StakeSeeker, we address, in multiple areas of our Form 10-K our risks, and considerations surrounding the crypto assets that we hold being potentially considered securities pursuant to federal securities laws. Below we have included excerpts from one such example of disclosures included in our Risk Factors in our upcoming Form 10-K:

“Because crypto assets may be determined to be Digital Securities, we may inadvertently violate the 1940 Act and incur large losses as a result and potentially be required to register as an investment company. This would have a material adverse effect on an investment in us.

“In order to limit our acquisition of Digital Securities to stay within the 40% threshold, we will examine the manner in which a crypto asset was initially marketed to determine if it may be deemed a Digital Security and subject to federal and state securities laws. Even if we conclude that a particular crypto asset is not a security under the 1940 Act, certain states take a stricter view which means the crypto asset may have violated applicable state securities laws.

Should the total value of securities which we hold exceed more than 40% of our assets (exclusive of cash) SEC Rule 3a-2 under the 1940 Act allows an issuer to prevent itself from being deemed an investment company if it reduces its holdings of securities to less than 40% of its assets (exclusive of cash) and does not go above the 40% threshold more than once every three years. Accordingly, if changes in the classification of crypto assets causes us to exceed the 40% threshold, we may experience large losses when we liquidate Digital Securities as a result of continued volatility.

The

40% requirement may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings. In any event, we do not intend to become an investment company engaged in the business of investing and trading securities.

To the extent that crypto assets held by us are deemed by the SEC or a state legislator to fall within the definition of a security, we may be required to register and comply with additional regulation under the Investment Company Act, including additional periodic reporting and disclosure standards and requirements and the registration of our Company as an investment company.”

Read in the reply ↗

In future filings please include a separate risk factor specifically addressing the risks to your business if your staking program were determined to involve the offer and sale of securities.

plan to include the following new Risk Factor disclosure in our upcoming Form 10-K, as well as in future filings, in consideration of the Staff’s comments:

If the SEC concludes that our non-custodial staking business involves the offer and sale of a security in violation of Section 5 of the

Securities Act of 1933 and the courts conclude the SEC is correct, we will be required to cease our staking as a service business and seek another business opportunity and may be subject to monetary and other penalties.

SEC has been successful in litigating against certain companies and individuals who

Rest of the answer

have offered and sold various cryptocurrencies in violation of the registration provisions of the Securities Act of 1933 (the “Securities Act”) and the anti-fraud provisions of the Securities Act and the Securities Exchange Act of 1934 (the “Exchange Act”). While we believe that our non-custodial staking business does not involve the offer or sale of a security, we do not know if the SEC will agree or whether if we seek relief from the courts, we will be successful. If we are also found to have offered and sold securities in violation of the Securities Act and the Exchange Act, the SEC could sue us for acting as an unregistered dealer. Further, as discussed in the risk factor noted above, we may inadvertently violate the 1940 Act.

Whether we voluntarily cease our current business or litigate and lose, we would be required to find another business opportunity whether through an acquisition or otherwise. We may also have to pay a civil monetary penalty if the SEC sues us and is successful or as a condition of any settlement.

have no plans with regard to another business opportunity and our shareholders may not have any opportunity to vote on any new business, unless our common stock remains listed on the Nasdaq Capital Market and its rules require it.

Note

3. Summary of Significant Accounting Policies

Read in the reply ↗

We acknowledge your response to our prior comment 10. Please revise your digital assets accounting policy to include a discussion of how your policy of classifying digital assets as current is consistent with the definition of current assets in ASC Topic 210-10-20.

Rest of the question

Specifically, please revise your accounting policy to state, if true, that digital assets are classified as current assets because you have a reasonable expectation that they will be realized in cash or sold or consumed during the normal operating cycle of your business. Form 10-Q for the quarterly period ended September 30, 2023 filed November 9, 2023

plan to include the following enhanced disclosure to our Accounting Policies in our upcoming Form 10-k, as well as in future filings,

“Crypto assets are measured at their fair respective fair market values at each reporting period end on the balance sheets and classified as either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish their nature within the respective balances.

Staked crypto assets are presented as current assets if their lock-up periods are less than 12 months, and as long-term other assets if the lock-up extends beyond one year.

Rest of the answer

The majority of our crypto assets are staked, typically with lock-up periods of less than 21 days, and are considered current assets in accordance with ASC 210-10-20, Balance Sheet, as we have a reasonable expectation that they will be realized in cash or sold or consumed during the normal operating cycle of our business.”

Read in the reply ↗

We acknowledge your response to prior comment 12 and reissue it in part. Please address the following: • Quantification of rewards and revenue earned for 2021; and • Tell us whether you have generated any revenue from your Staking-as-a-service business, and quantify in the periods presented.

Please find below table detailing quantification of rewards and revenue earned for 2021 in similar tabular format of the same details provided for fiscal years 2023 and 2022 in our upcoming Form 10-K, as previously communicated in our response to prior comment 12.

assets earned from staking to BTCS validator nodes

FY

2021

Asset

Token

Rewards

($USD)

Ethereum

(ETH)

406

$ 1,203,935

Avalanche

(AVAX)

5,749

Tezos

(XTZ)

482

2,501

Algorand

(ALGO)

519

928

Cosmos

(ATOM)

171

Total earned from staking to BTCS validator nodes

$ 1,213,284

From the inception of our

Rest of the answer

staking-as-a-service operations, we have maintained our Validator Fee percentage at 0% or the minimum mandated by each blockchain network’s protocol, a strategic decision aimed at attracting delegators and enhancing our brand visibility. We earned an immaterial amount of validator fee rewards on three different blockchain networks for which we operate validator nodes in 2023, as detailed in the table below. We did not earn any such validator fee rewards in 2022. Due to the immateriality of these 2023 rewards, they have been aggregated with our regular staking rewards under Validator Revenue in the Statement of Operations. Consequently, we chose not to itemize these validator fee rewards in our 2023 Form 10-K, considering their immateriality. However, as these rewards become more significant, we intend to provide detailed disclosures in future reports.

Name

Validator

Fee %

Rewards Earned as Validator Fee

Fee Revenue ($USD)

Akash

5 %

394

$ 964

Kava

284

$ 248

Evmos

2,420

$ 150

$ 1,362 the Staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the Staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Brian S. Bernstein, Esq. or Michael D. Harris, Esq. of Nason Yeager Gerson Harris & Fumero, P.A., the Company’s legal counsel, at 561-686-3307, bbernstein@nasonyeager.com and mharris@nasonyeager.com.

Read in the reply ↗

Refer to your response to our prior comment 1. Your disclosure on page 4 that "StakeSeeker . . . strategically seeks to entice users with its features" and that "[o]ne underlying strategic objective of the platform is to drive the expansion of Delegators to [y]our validator nodes" appears to be inconsistent with your response to comment 17 of our September 21, 2023 letter in which you state that you "[do] not use

Rest of the question

behavior prompts, differential marketing, game-like features, other design elements or features designed to engage with retail investors," that you "do not encourage retail investors to invest in different products or change investment strategies or give investment advice," and that you "do not use any optimization functions (e.g., to increase platform revenues, data collection, and customer engagement)." Please advise, and, in future filings, please clarify the role of your StakeSeeker platform.

In response to the SEC’s comment, it is crucial to delineate the distinct roles and functionalities of the StakeSeeker platform as a cryptocurrency educational website versus the regulated activities typically associated with an investment advisor providing investment advice.

It is also important to understand that the “features” referenced in our disclosure language that “seeks to entice users

….

Rest of the answer

To drive the expansion of Delegators” is clarified to mean the Platform’s unique functionalities as a cryptocurrency tracking tool.

an effort to avoid any further confusion in future filings, we will remove the following language from page 4 of our 2023 Form-10K: “One underlying strategic objective of the platform is to drive the expansion of Delegators to our validator nodes.”, we will further revise the following language on page 10 of our 2023 Form-10K: “We believe that leveraging StakeSeeker’s capabilities to provide insights and guidance will foster trust and confidence. among potential Delegators.

As further elaborated below, the platform does not utilize additional specialized features aimed to collect data on or engage with investors.

1. Definition and Purpose of StakeSeeker as a Crypto Educational Website: StakeSeeker is designed primarily as a platform to provide information and education on blockchain technology and cryptocurrency investments. The platform’s features, including strategic enticements and expansion objectives mentioned on page 4 of the 2023 Form 10-K, are focused on enhancing user engagement and education and increasing registered users. These features aim to facilitate user understanding and familiarity with blockchain ecosystems, rather than making investment recommendations.

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Refer to your response to our prior comment 1 and prior comment 11 of our September 21, 2023 letter. Please advise regarding the nature of your staking services, including a description of the specifics of how an investor delegates its crypto assets.

Rest of the question

In this regard, we note your disclosure on page 4 that "StakeSeeker does not provide or facilitate direct, crypto asset delegation or transaction execution on [y]our platform" and that you anticipate "taking the StaaS Platform out of beta prior to the end of 2024." We also note that your website seems to allow investors to delegate crypto assets from the StakeSeeker platform. Please advise as this appears to be inconsistent with your disclosure. Also, we note your disclosure on page 16 that "[c]rypto asset holders are able to delegate to [y]our validator nodes without signing up for our StakeSeeker platform" but that, in the instructions on how to delegate crypto assets on your website, you indicate that investors should register on StakeSeeker. Please advise as this appears to be inconsistent with your disclosure, and to the extent that disclosure should be revised to reconcile these inconsistencies, please do so in future filings.

Absence of Investment Advice: Consistent with our response to previous comment 17, StakeSeeker does not provide personalized investment advice, recommend investment products, or advocate for particular investment strategies. The platform does not employ behavioral prompts, differential marketing, game-like features, or other engagement mechanisms that are tailored to influence investment decisions. Our platform provides educational resources on blockchain networks and staking, which users can choose to leverage at their discretion.

Rest of the answer

It’s crucial to highlight that users accessing our platform must already possess crypto assets in order for the platform’s monitoring capabilities and educational resources to be meaningful.

This distinction is critical as it underlines that while the platform engages users and encourages exploration within the site, it does not steer them towards investments or trading behaviors.

Read in the reply ↗

Refer to your response to prior comment 15 of our September 21, 2023 letter. In future filings, please disclose the number of delegators you had as of the financial periods covered. In this regard, we note your disclosure on page 10 that "[a] critical component of [y]our growth strategy is to increase the number of Delegators and crypto assets delegated to [y]our validator nodes including [y]our own" and your table

Rest of the question

on page 16 that shows the number of crypto assets delegated as of December 31, 2023 but not the number of Delegators.

Clarification on Strategic Objectives and Features: The strategic objective of driving the expansion of Delegators to validator nodes, as referenced in the disclosure, is a broad business goal related to growth in user base and market presence. This does not translate into financial advice or encouragement for users to alter their investment portfolios.

Rest of the answer

Instead, it relates to increasing awareness and understanding of how blockchain networks operate, including the roles and functions of nodes and delegators within these networks, as well as sharing publicly available information on various blockchains that our infrastructure supports.

Read in the reply ↗

In future filings please disclose, if what you state in your response letter continues to be true, that since the inception of your staking-as-a-service operations you have maintained your Validator Fee percentage at 0% or the minimum mandated by each blockchain network’s protocol, a strategic decision aimed at attracting delegators and enhancing your brand visibility.

Compliance with Regulatory Standards: We believe StakeSeeker operates within the boundaries set forth by regulatory authorities for financial education platforms. Unlike registered investment advisors, who are subject to specific fiduciary duties and regulations regarding the provision of investment advice, StakeSeeker maintains its role as an educational resource without crossing into the advisory domain.

Rest of the answer

This ensures that while the platform seeks to enhance user engagement and platform utility, it remains clear of activities that would require registration and regulation as an investment advisor.

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We note that page F-2 of your audit report refers to the consolidated financial statements, while neither the opinion paragraph nor financial statements include "consolidated." Please revise future filings, if true, to clarify that your financial statements are consolidated, or have your auditor remove the reference to "consolidated financial statements."

Below we outline responses to the Staff’s comments on 1) the process of non-custodial staking, 2) information included on our website, and 3) information included in our staking instructions. We believe the information we have provided in response to the Staff’s comment supports the accuracy and consistency of the disclosures we have made in our Form 10-Ks and in other public materials.

Non-custodial

Staking Process

The following outline details the typical process involved in non-custodial staking, highlighting key steps and considerations.

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Each blockchain and digital wallet may have its nuances, so crypto asset holders are encouraged to familiarize themselves with specific guidelines and rules pertinent to their a specific blockchains, wallets and assets.

1. Crypto

Asset Custody: Investors must hold their crypto assets in digital wallets that support staking. These assets cannot be held on crypto exchanges as staking requires self-custody through compatible digital wallets. BTCS does not offer or sell crypto assets or recommend to users of the Stakeseeker platform any crypto assets.

2. Wallet

Access: Owners access their digital wallets using their private keys or mnemonic phrases, which are critical for maintaining the security and access to their assets. BTCS never takes possession or control of StakeSeeker’s user’s private keys or mnemonics, nor do we offer a wallet. We provide educational information on the site regarding some wallets that are compatible with certain blockchains but do not endorse any specific wallet.

3. Navigating

Staking Features: Investors can navigate to the staking options available within their digital wallet interface. This allows users to engage with the staking functionalities that the wallet supports. BTCS has no control over the features or functionality of 3rd party wallets that users may utilize, and as noted above, we do not endorse any specific wallet.

4. Selecting a Validator Node: From the 3rd party wallet staking interface, users can browse or search through a list of active validators. BTCS validator nodes are public and users can select our node or any other node.

5. Setting the Stake Amount: Once a validator is selected in their 3rd party wallet, the user can specify the amount of native tokens they wish to stake to a particular node, which may or may not be a BTCS validator. BTCS has no control or visibility into the users actions as they do not occur on our platform. Our platform aggregates publicly available information in a convenient manner to provide users with educational resources about the staking process. This information and educational resources do not provide any investment advice. Additionally, any actions made by users may be made independent of our platform.

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We note your disclosure of 14,567,829 Series V Preferred Shares issued and outstanding at $2,563,938 at December 31, 2023, and that in June 2023 the Series V was listed to trade on Upstream under the ticker symbol BTCSP. We also note your disclosure on page 14 that in November 2023 Upstream stopped providing U.S. individuals the ability to trade so all the related U.S.

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investor Series V shares were returned to the transfer agent. Please tell us the following: • How many of the issued shares were returned to the transfer agent; and • Your accounting for preferred stock and related dividends issued that are subsequently returned during 2023, including reference to the accounting guidance supporting your determination.

Confirming the Delegation: To finalize the delegation, the user must confirm and sign the transaction.

This action securely delegates the specified amount of tokens to the chosen validator node, which may or may not be a BTCS validator node. Read in the reply ↗

We note that you early adopted ASU 2023-08 effective January 1, 2023 and updated your disclosures for this material change in accounting principle. Please revise future filings to disclose the method used to determine your cost basis for computing gains and losses (for example: first-in first-out, specific identification, average cost, or another method used) as required by ASC 350-60-50-2a.

Node Interaction: After the stake is confirmed, the validator node facilitates the bonding of these tokens to the blockchain network. This bonded stake allows the holder to participate in the network’s consensus mechanism, potentially earning rewards in the form of native tokens. BTCS never has access to the user’s tokens at any time during the process including any rewards that may be earned. Read in the reply ↗

We note your disclosure that Kraken is your primary exchange and principal market but CoinMarketCap is your principal pricing source. In this regard, we note that CoinMarketCap does not appear to be a market where bitcoin can be sold, and therefore does not appear to be an appropriate selection for your principal market.

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Tell us the following: • why you have a separate principal market and principal pricing source; • how you have overcome the presumption in ASC 820-10-35-5A that a principal market is presumed to be the market where you would normally transact; • revise your policy in future filings to use the exchanges you would normally transact as your principal market and principal pricing source; and • provide us with your SAB 99 materiality analysis for each period presented, by digital asset, of the aggregate price from your principal market versus the price from CoinMarketCap utilized in valuing your digital assets held.

During Staking: Throughout the staking period, the custody of the crypto assets remains with the delegator in their digital wallet. The assets are effectively ‘locked’ in the staking process but not transferred out of the wallet. While staked, these assets cannot be used for other purposes like trading or borrowing. Again, BTCS never has access to these tokens. Read in the reply ↗

Please confirm your understanding that: • Our decision not to issue additional comments should not be interpreted to mean that we either agree or disagree with your disclosure or responses, or, with respect to your business operations, any conclusions you have made, positions you have taken, or practices you have engaged in or may engage in.

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• Completing our review of the filing does not foreclose the Commission from taking any action or advancing any position with respect to the filing, the company, or the company’s practices.

The

Company hereby confirms its understanding that:

● The

Staff’s decision not to issue additional comments should not be interpreted to mean that the Staff either agrees or disagrees with the Company’s disclosure or responses, or, with respect to the Company’s business operations, any conclusions the Company has made, positions the Company has taken, or practices the Company has engaged in or may engage in.

the review of the filing does not foreclose the Commission from taking any action or advancing any position with respect to the filing, the Company, or the Company’s

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practices.

Should the Staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the Staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Brian S. Bernstein, Esq. or Michael D. Harris, Esq. of Nason Yeager Gerson Harris & Fumero, P.A., the Company’s legal counsel, at 561-686-3307, bbernstein@nasonyeager.com and mharris@nasonyeager.com.

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We note that you previously registered a resale offering by Cavalry Fund I, LP on Form S1 that was declared effective on May 28, 2019 (file no. 333-231586). The prospectus supplement filed August 28, 2019 also appears to indicate that Cavalry Fund I, LP has completed the resale of all of the securities registered under this prior registration statement.

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Given the prior offering by Cavalry Fund I, LP and the amount being registered with the current registration statement, the transaction appears to be a primary offering. Because you are not eligible to conduct a primary offering on Form S-3, you are not eligible to conduct a primary at-the-market offering under Rule 415(a)(4). Please tell us the date on which Cavalry Fund I, LP and its affiliates completed the resale of all of the securities registered under the prior registration statement. Please revise your current registration statement to register no greater than one-third of the number of the company's outstanding shares held by non-affiliates. Please note that the one-third calculation may need to include shares registered for resale under the prior Form S-1 depending on the amount remaining on the prior Form S-1 and the date of the last sale under the prior Form S-1.

States Securities and Exchange Commission

Division of Corporation Finance

100

F Street, NE

Washington,

DC 20549

Attention:

Jan Woo and Mitchell Austin

Re:

BTCS Inc.

Registration

Statement on Form S-1

File

No. 333-233638

Mr.

Austin:

As requested on your phone call with legal counsel for BTCS Inc. (“BTCS”), BTCS is providing you with the following information:

●

The

Registration Statement on Form S-1 (File No.

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333-231586) (the “Prior S-1) went effective May 28, 2019; and

Company sold all the shares to the Selling Shareholder on or prior to August 18, 2019 and the Selling Shareholder indicated to the Company that they had sold substantially all of the shares under the Prior S-1 on or prior to September 18, 2019.

Consequently, the Company waited to file a new registration statement on a date that is later than: (i) six months from the effective date and

(ii) 60 days after substantially all of the shares were sold.

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You indicate that your new line of business focuses on open market purchases of digital assets and investing in initial digital asset offerings. Revise to describe with more specificity the types of digital assets that you intend to invest in and any parameters or criteria that you will use to make such investment determinations.

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Expand to briefly discuss the nature of your current operations and identify the types of digital currencies that you currently hold.

BTCS intends to engage in Digital Asset mining, purchasing Digital Assets in open market transactions, and purchasing

Digital Assets in initial coin offerings. The Amendment specifics the types of Digital Assets that BTCS may acquire and certain parameters that will influence BTCS’ acquisition decisions including increased compliance and legal costs. The Amendment also lists the Digital Assets currently held by BTCS. The prospectus complies with the comment and adds information concerning

Digital Assets currently owned. See the discussion at pages 1, 3, 26, 33 and 45. Read in the reply ↗

We note your Form 8-K filed on August 21, 2017 indicating that you signed a letter of intent to merge with Blockchain Global Limited. Expand your summary to discuss the risks and challenges relating to consummating the merger, including any regulatory risks related to Blockchain Global Limited’s business.

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Additionally, tell us whether the operations of BCG’s Technology Consultancy business, which you state includes the preparation and support of initial coin offerings, and the operations of the ACX.io Exchange will trigger any obligations under the federal securities laws, including, but not limited to, any requirements to register as a national securities exchange, alternative trading system or broker-dealer.

Blockchain Global Limited (“BCG”) has represented to us that they do not have United States customers nor do they operate an exchange in the United States. BCG has represented to BTCS that they are compliant with Australian laws and that they do not underwrite or act as a broker with respect to their business. As such, BTCS does not believe, based on BCG representations that BCG would be subject to any requirements to register as a national securities exchange, alternative trading system or broker-dealer.

However, the Amendment addresses risks arising from the above-mentioned issues.

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Further, BCG has delayed providing due diligence materials to BTCS. If after receipt of and review of appropriate documentation we perceive the risks are material, we may elect to terminate discussions. See discussion at pages 11, 12, 19, 34 and 45.

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The disclosure on pages 20-21 briefly describes why you do not believe that BTCS, Inc. is an investment company under the Investment Company Act of 1940. Please provide further information needed to conduct an analysis under sections 3(a)(1)(A) and 3(a)(1)(C) of the 1940 Act and any other provision of the 1940 Act upon which BTCS, Inc. is relying to exclude it from the definition of an investment company.

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In particular, list all assets held by BTCS, Inc. and the value you assign to each on an unconsolidated basis. Ensure that your analysis also addresses your plans to participate in initial coin offerings.

The nature and value of our Digital Assets as of a recent date has been added at page 26. Section 3(a)(1) of the Investment

Company Act of 1940 (the “1940 Act”) provides that an investment company is an issuer that:

(A) is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities… (C) is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 per centum of the

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value of such issuer’s total assets (exclusive of Government securities and cash items) on an unconsolidated basis. 1

15 U.S.C.A. § 80a-3 does not believe that it would be considered an Investment Company under 3(a)(1)(C) of the 1940 Act because BTCS will not own or propose to acquire investment securities having a value exceeding 40 per centum of the value of BTCS’s total assets.

BTCS recognizes that some Digital Assets may be securities and does not intend to acquire securities, in the form of Digital Assets, which exceed 40 per centum of the value of BTCS’s total assets. BTCS discloses at pages 7, 10, 11 and 41 that its compliance costs will be higher in order to comply with the 1940 Act and the federal and state securities laws.

does not believe that it would hold itself out as being engaged primarily, or proposing to engage primarily, in the business of investing, reinvesting, or trading in securities. In Securities and Exchange Commission v. Fifth Ave. Coach Lines, Inc., the Second Circuit placed emphasis on the word primarily, stating that “whether a company is engaged primarily in the business of investing, its total activities of all sorts must be considered.”2

In Securities and Exchange Commission v. National Presto Industries, the Seventh Circuit found that “what matter are the company’s history, the way the company represents itself to the investing public today, the activities of its officers and directors, the nature of its assets, and the sources of its income…. More important ... [is whether] the nature of the assets and income of the company, disclosed in the annual reports filed with the Commission and in reports sent to stockholders, was such as to lead investors to believe that the principal activity of the company was trading and investing in securities.”3 does not engage or intend to engage primarily in the business of investing in securities but rather in mining Digital Assets.

Its acquisition of tokens in digital coin offerings will be carefully limited to avoid the 40 % limit. The Securities and Exchange

Commission’s analyzed whether tokens were a security in its July 25, 2017, Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 (the “Report”). The Report suggests applying the Howey test to determine if a specific token constitutes a security. BTCS intends to verify that tokens and Digital Assets acquired by BTCS do not cause BTCS to acquire securities to the extent that BTCS would be required to register as an Investment Company under the 1940 Act. We are mindful of a recent speech by the Chairman of the Commission that tokens are likely to be deemed to be securities.

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Rather than referring to “Digital Assets” generally, revise your risk factor disclosure to distinguish between the types of assets you are referring to and any uncertainties specific to that category of currency.

As defined on page 1 of the prospectus, Digital Assets are tokens “based upon a computer-generated math-based and/or cryptographic protocol that may, among other things, be used to buy and sell goods or pay for services.” Bitcoin is one such Digital Asset.

BTCS plans to acquire and create a portfolio of Digital Assets including Bitcoin. The Amendment discloses uncertainties pertaining to Bitcoin starting on page 10. In the prospectus, we distinguish between Digital Assets and Digital Securities.

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See pages

7, 10-11, and 41.

Due to the novelty and continuously evolving nature of Digital Assets, it is impossible to state with sufficient certainty which Digital

Assets BTCS will be acquiring. BTCS intends to acquire Digital Assets which in its opinion may appreciate in value. Additionally, due to the continuously evolving nature of Digital Assets it is impossible to state with sufficient certainty which Digital Assets, if any, contain specific uncertainties that are different from other Digital Assets. Digital Assets all face similar risks except to the extent that Digital Securities present far reaching risks under the federal and state securities law. As of the date of this letter BTCS believes that there are over 1,000 tokens that could constitute Digital Assets and it would be impractical for

BTCS to analyze risk factors for each type of Digital Asset. However, the Amendment expands on the risk factors listed in the prospectus and discloses additional risk factors which intend to provide an accurate and full disclosure of the risks BTCS will encounter. See pages 10, 11, 17, 20, and 21.

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In light of your stated intent to invest in digital tokens and participate in initial coin offerings, expand your risk factors to address the specific risks related to investing in and holding these types of assets. Expand to discuss with specificity the impact on your business if your assets are deemed to be securities for the purposes of federal securities laws.

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Further, to the extent that your proposed merger with Blockchain Global Limited raises any other regulatory obligations under the federal securities laws, ensure that you discuss any resulting material risks to your business.

We have expanded our disclosure as requested at pages 7, 10, 17, 20 and 21. Please see our response to Comment 2. Read in the reply ↗

In light of your stated intent to invest in assets other than bitcoins, expand your disclosure to describe the nature and characteristics of these assets. Although your discussion addresses the implications related to the possibility of bitcoins being deemed securities, expand to address the various types of digital currencies and assets that you intend to hold, which you state includes protocol tokens.

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Revise your disclosure under Government Oversight on page 42 to address the regulatory treatment of these assets.

As stated in above, BTCS believes that there are over 1,300 tokens that could constitute Digital Assets and it would be impractical for BTCS to analyze risk factors for each type of Digital Asset. The Amendment discloses the nature, characteristics, and regulatory treatment of some types of Digital Assets and tokens which BTCS may hold in the future. See pages 1, 3, 11 and 15. We have provided a table listing our portfolio of Digital Assets as of a recent date. We have updated the recent regulatory changes at pages 41-45. Read in the reply ↗

Revise your principal stockholder table to include beneficial ownership of all classes of voting securities, including Class B and C common stock. See Item 403 of Regulation S-K.

BTCS does not have Class B or C common stock. We assume the Staff meant preferred stock. The Amendment revises the beneficial ownership table accordingly at page 50. Read in the reply ↗

We note instances where you refer to your fiscal year ended as June 30, whereas elsewhere you state that your fiscal year end is December 31. Revise or advise.

BTCS’s fiscal year ends on December 31. The Amendment reflects the December 31 fiscal year end. See page 30. Read in the reply ↗

Please update your financial statements and related financial information included in the filing, as necessary, to comply with Rule 3-12 of Regulation S-X.

The Amendment updates BTCS’ financial statements and related financial information to reflect the 135 day age requirement in Rule 3-12 of Regulation S-X.

Should the staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Michael D. Harris, the Company’s legal counsel, at 561-471-3507, mharris@nasonyeager.com. Read in the reply ↗

It is unclear whether the digital assets you currently hold and intend to hold are securities. Please provide a detailed analysis explaining why you believe Bitcoin, Ether, Dash and Monero, and any other digital assets that are likely to be held by the company are not securities as defined in Section 2(a)(1) of the Securities Act.

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Your analysis should address substantive differences between each form of digital asset and how those differences affect your conclusions.

Amendment 3 updates the Registration Statement to reflect our beliefs on whether each of the Digital Assets held by the Company are securities. Additionally, attached as Exhibit A is a supplemental memorandum containing a more formal legal analysis citing cases and other authorities supporting our conclusion. The required disclosure has been added at pages 41 - 42.

The Company recognizes the economic reality that most initial coin offerings involve the offer and sale of a security.

Disclosure has been added to follow the Commission’s action in the Munchee case. See page 41. Read in the reply ↗

We note that the company intends to limit its holdings of digital assets that are securities so that such holdings are less than 40% of its portfolio. Please provide a detailed description of the process and framework the company will use for determining which digital assets to add to its portfolio.

As stated in the Registration Statement, the Company currently limits its holdings of Digital Assets that are securities so that securities are less than 40% of its assets, excluding cash. See pages 21, 41-42. In the future the Company intends to apply a similar analysis to that provided on Exhibit A to ensure that it does not acquire virtual currency or digital assets which would cause securities to constitute more than 40% of such assets. The additional costs to the Company and risks of being an investment company are disclosed at page 21. Read in the reply ↗

With respect to bitcoins (and other digital assets) that the company mines, disclose whether the company plans to hold the mined assets or trade them.

As disclosed in the registration statement, the Company does not currently have any mining operations but may resume its mining operations through outsourced data centers if it receives additional capital. To the extent that the Company resumes mining operations, we do not intend to trade the Digital Assets, we have revised our disclosure accordingly to reflect our position. The required disclosure has been added at pages 1, 21, and 33. Read in the reply ↗

Expand your disclosure to describe the company’s custodial practices for digital assets, to the extent they are material. Also, we note recent news reports that digital wallets have been subject to hacking. To the extent you have experienced a material cybsersecurity incident related to your digital wallets, tell us about the incident(s) and any material consequences and risks to your business.

The Company does not use a custodian to secure its Digital Assets. We have revised our disclosure to include a new risk factor since only bitcoin is held in a wallet. See page 21. The Company has not experienced any material cybersecurity related incidents since we entered the business in 2014. Read in the reply ↗

We note your revisions in response to prior comments 1 and 4. However, to the extent that your definition of Digital Securities includes any tokens obtained through participating in initial coin offerings, expand the definition to briefly identify these categories of assets.

We have not participated in any initial coin offerings because most initial coin offerings appear to offer tokens which constitute

Digital Securities. See the answer to comment 2. We have revised the description of our business accordingly. The required disclosure has been added at pages 1, 26, 41-42. Read in the reply ↗

Describe how you intend to distinguish between financial accounting for Digital Assets and Digital Securities, and clarify what precedents you refer to with regard to accounting for Digital Securities. Explain how you will value your digital assets and whether the same methodology will be used to value all digital assets.

The requested disclosure has been added in the Management Discussion and Analysis at page 26. There is currently no authoritative literature under accounting principles generally accepted in the United States which specifically addresses the accounting for

Digital Assets, including digital currencies. Therefore, by analogy we are recording Digital Assets similar to financial instruments under ASC 825, Financial Instruments, because the economic nature of these Digital Assets is most closely related to a financial instrument such as an investment in a foreign currency.

Rest of the answer

Digital Securities are typically uncertificated securities, the ownership and transfer of which are recorded on a proprietary or open source ledger that may be publicly distributed. Therefore, we believe that such securities would be considered a financial instrument in accordance with ASC 825. Because Digital Assets and Digital

Securities will be accounted for in accordance with ASC 825, such securities would be valued in accordance with ASC 820, Fair

Value Measurements. An expanded version of this analysis has been added as a disclosure at page 26.

Read in the reply ↗

You state that you will attempt to limit your acquisitions of Digital Securities to “stay within the 40% threshold.” To provide context to this risk, please expand your discussion to briefly discuss the nature and impact of this provision of the Investment Company Act.

In the Amendment we have expanded our discussion to address the nature and impact of the 40% threshold of the Investment Company

Act upon the Company and its acquisition of Digital Assets. The required disclosure has been added at pages 21 and 42.

Disclosure has also been added at page 21 concerning the limited one year cure period. Read in the reply ↗

You disclose that you have been advised by BCG that they have raised money from offshore investors and they have not attempted to comply with Regulation S under the Securities Act. You further note that these transactions may result in a liability for BTCS. Describe the scope of any potential liability.

We have added disclosure at pages 11 and 34. As we note, any liability to the Company arising from BCG’s non-compliance with Regulation S would only arise at the subsidiary level if the Company closes its acquisition of BCG. The status of this proposed acquisition and the limited likelihood of it occurring has been disclosed at pages 11 and 34. Read in the reply ↗

We note your response to prior 2. Tell us how BCG ensures that they do not have any United States customers, and describe the compliance used.

We have been unable to obtain this information from BCG. Read in the reply ↗

Your risk factor caption indicates that you may incur unknown liabilities under foreign laws. However, the body of your risk focuses on the potential U.S. liabilities. Expand to discuss:  any potential regulatory implications, in Australia or other jurisdictions, where BCG has cryptocurrency exchanges;  whether BCG’s ICO and token sales consultancy business is impacted by any developments under Australian law; and

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 whether BCG’s facilities in China are impacted by the regulatory updates in the PRC referred to on pages 14 and 19.

Given the limited likelihood this acquisition will occur, we do not believe these potential liabilities are material since a reasonable investor would not want to know this before buying or selling our common stock.

Should the staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Michael D.

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Harris, the Company’s legal counsel, at 561-471-3507, mharris@nasonyeager.com.

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Please refer to prior comment 1 and provide a detailed legal analysis as to why each digital asset that you intend to acquire, hold or trade, is not a security as defined in Section 2(a)(1) of the Securities Act. We note that you did not provide an analysis for Dash and Monero and your response is unclear as to why the company believes that Ether is not a security.

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As part of your response, address the distinct characteristics of each kind of digital asset and specifically conclude whether the digital asset is a security.

As of March 6, 2018, the Company has no Dash or Monero and does not intend to re-acquire any digital assets other than bitcoin and ether, until such time as the Company has sufficient working capital to cover the costs associated with performing a legal analysis to determine whether the digital asset is a digital security. Amendment 4 updates the Registration Statement to reflect our beliefs on whether ether is a security.

Rest of the answer

As for ether, our lawyers believe that ether is not a security for the same reasons previously expressed for bitcoin and that the Exhibit A provided as part of the filing for Amendment No. 3 is equally applicable, except as discussed below. The required disclosure has been added at page 40. Ether was initially offered by the Etherium Foundation as part of a pre-sale in 2014. When ether was initially sold it may have been a security. However, due to the Etherium Foundation focusing on non-essential updates to the platform and limiting its role in support of the Etherium platform in contrast to the development of ether, the Company believes that ether is no longer a security, to the extent it ever was.

Company is not relying upon the efforts of others to profit from its investment in ether any more than it would if it acquired the euro, gold, wine or art. Ether as a virtual currency will rise or fall in value apart from any efforts of its developer or the Ethereum Foundation. Our lawyers believe that ether is no longer a security (to the extent it ever was a security) for the same reason the Howey orange grove in the hypothetical fact scenario ceased to be a security. Assume that following the Howey decision in the Supreme Court, there was a foreclosure sale of the Howey In the Hills orange grove at which a lender sold the orange grove and related equipment to a Florida rancher who bought it in a general partnership in which his corporation was the sole partner. The partnership operated the orange grove for 10 years. It seems clear that the partnership was not a security.

Assume further the partnership sold the orange grove land including the trees and equipment to another rancher. We are sure the

Staff recognizes that whether or not an instrument or factual scenario is an investment contract is determined by the underlying facts and circumstances. Just as the Supreme Court using a facts and circumstances test held in Howey that the sale of the orange grove interests involved an investment contract, it would be unreasonable to conclude that grower one sold a security to grower two in our hypothetical. The same reasoning applies to ether.

Further, as mentioned in the Commission’s Report, ether is a virtual currency originally created by the Ethereum Foundation that operates digitalized contracts on a decentralized blockchain platform called the Ethereum Blockchain.1 The Report refers to ether as a “virtual currency” which was used to purchase DAO tokens. In the Report the Commission concluded that the DAO tokens under discussion were securities. As such, the Company does not believe that ether is a security.

U.S. Securities and Exchange Commission, Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO, Release No. 81207, July 25, 2017.

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We note your responses to prior comments 1 and 2 that the company will ensure that the holdings of digital assets that constitute securities will not be greater than 40% of total assets. Please provide a detailed description of the process and framework the company will use in managing its digital assets to stay below this 40% threshold.

Rest of the question

Your description should include how the company will determine whether a particular digital asset is a security and who will make such determination. Please include in your analysis how you will be able to limit your holdings to less than 40% of total assets given the volatility of digital assets. Please expand your risk factors to discuss the impact of volatility on the company.

The Company recognizes the risk that its securities may exceed the 40% test particularly since those securities with an active trading market, whether Apple stock or a cryptocurrency security that actively trades, must be marked to the market. Accordingly, the Company will create software alerts to notify management so it can take prompt action when the value of its investment securities passes a certain threshold, i.e. 35%.

Rest of the answer

Further in the future the Company, subject to available resources, plans to acquire or develop tools that permit automatic liquidation to avoid exceeding the 40% threshold. Ultimately, if our procedures are insufficient due to the volatility, there is a one-year cure period. See the disclosure in the prospectus at page 39. In terms of determining whether a particular digital asset is a security, the Company will rely on experienced securities counsel to provide written advice before it acquires a digital asset. We recognize that reliance on counsel may not be a defense to a 1940 Act registration violation.

A risk factor on volatility has been added at page 11 of the prospectus.

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We also note your response to comment 5 but your disclosures still indicate that you may participate in initial coin offerings. If you do not intend to participate in initial coin offerings, please revise the disclosures accordingly.

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If you intend to participate in initial coin offerings, please provide a detailed analysis as to the process and framework the company will use in determining whether to participate in an initial coin offering.

We do not intend to participate in initial coin offerings. Our prospectus has been updated at page 1. Read in the reply ↗

Please refer to prior comment 9 and tell us how BCG ensures that they do not have United States customers. You should disclose the basis for BCG’s representation that it does not have customers in the United States or disclose clearly that you are not able to verify this information.

The Company terminated the BCG transaction and filed a Form 8-K on February 5, 2018. Read in the reply ↗

In response to prior comment 10, you state in the response letter that you believe there is “limited likelihood” that the acquisition will occur. Please revise your disclosure to reflect this belief. To the extent that you are still in discussions with BCG to merge, discuss the potential foreign liabilities of BCG’s digital asset activities.

Should the staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Michael D. Harris, the Company’s legal counsel, at 561-471-3507, mharris@nasonyeager.com. Read in the reply ↗

We note you disclose on page 40 that your counsel has advised you that it is “more likely than not that ether is not a security” but that “due to cost considerations [y]our counsel has not completed a full analysis as to whether or not ether is a security.” We also note that you have determined that the bitcoin you hold is approximately 70% of your eligible assets and that you intend to monitor its value daily.

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We note you disclose on page 11 that “[r]egardless of the internal procedures [you] take to avoid surpassing the 40% test, future volatility during the course of a day may cause [you] to exceed the 40% limit.” We also note you disclose that “it will never be practical” for you to register under the Investment Company Act of 1940. Please be advised that, at this time, we are unable to conclude that ether is not a security. With respect to ether and any new digital asset that you acquire or intend to acquire, we expect you will continue to monitor the value of your eligible assets to maintain appropriate amounts of your digital assets so that you are not required to register as an investment company or that you will promptly register as an investment company if your digital asset holdings exceed a permitted value.

understand the Staff’s position and will continue to monitor the valuation of our digital assets and endeavor to remain below the 40% limit. We recognize we need to comply with all applicable laws and if required we will promptly register as an Investment Company or cease operations.

Prospectus

Summary, Read in the reply ↗

Your revised disclosure in response to prior comment 3 suggests that your decision not to participate in initial coin offerings is solely based on the fact that you “cannot qualify as an accredited investor.” Regardless of whether you qualify as an accredited investor, please provide an unqualified statement as to whether you intend to participate in registered initial coin offerings.

We have revised the disclosure accordingly to include a statement that we do not intent to participate in registered or unregistered initial coin offerings.

See pages 1, 24, and 31 of the prospectus. Read in the reply ↗

You disclose that you plan to continue to evaluate “other strategic opportunities” in digital assets and blockchain technologies. Please expand your disclosure to discuss the type(s) of opportunities that you may pursue, and provide a detailed description of the process and framework that you will use to evaluate them.

Even though the prices of digital assets have fallen substantially and there remains some regulatory uncertainty, we believe that businesses using blockchain technology and those involved with digital assets such as bitcoin, offer upside opportunity and are the types of opportunities that we may pursue. Our process and framework involve our management leveraging their industry networks, which have been built over many years of working in the industry, to identify and approach potential acquisition targets and gauge their interest in merging with us.

Rest of the answer

Our acquisition activities are spearheaded by Charles Allen, our Chief Executive Officer who regularly communicates with Mr. David Garrity, an independent director who is also seeking acquisition targets. Once we reach a point where any merger might be deemed probable our process would involve the entire board of directors and they would be provided due diligence materials and other documents, and ample time to review such material consistent with their fiduciary duties and the goal of creating value for our shareholders.

current framework or criteria is to seek and evaluate acquisition targets in the blockchain and digital asset sector which are:

i) synergistic to our business model, and ii) have sufficient capital to provide working capital and cover public company expenses.

The requirement that a potential target have sufficient capital is a result of our inability to have this registration statement declared effective which has severely limited our ability to raise non-toxic capital. As disclosed in our prospectus we have limited cash, and accordingly as a critical framework element are seeking acquisition targets with sufficient capital which may help us sustain our operations without having us rely on toxic funding structures. This framework naturally reduces the addressable universe of targets as many companies seeking to access the public markets are doing so for access to non-toxic funding.

Read in the reply ↗

Notwithstanding your consideration as to whether you are an investment company under the Investment Company Act, please analyze for us whether you are otherwise an investment company as defined in ASC 946.

The Company has evaluated the accounting guidance in ASC 946-10-15-6 that sets forth the fundamental characteristics of an investment company under

U.S. GAAP. Additionally, we have included an analysis of the implementation guidance in ASC 946-10-55-4 through 55-10 that illustrates these concepts. The Company has reviewed the accounting guidance below and concludes that the Company does not have the fundamental characteristics of an investment company for U.S. GAAP purposes under ASC 946.

Rest of the answer

Responsive information has been taken directly from the Company’s updated public filings including the prospectus.

U.S.

GAAP describes the following fundamental characteristics of an investment company:

946-10-15-6

An investment company has the following fundamental characteristics:

a.

It is an entity that does both of the following:

Obtains funds from one or more investors and provides the investor(s) with investment management services

Commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income, or both.

b.

The entity or its affiliates do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income.

946-10-55-4:

An investment company should have no substantive activities other than its investing activities and should not have significant assets or liabilities other than those relating to its investing activities, subject to the exception in the following paragraph.

946-10-55-5:

An investment company may provide investing-related services (for example, investment advisory or transfer agent services) to other entities, directly or indirectly through an investment in an entity that provides those services, as long as those services are not substantive. However, an investment company may provide substantive investing-related services, directly or indirectly through an investment in an entity that provides those services, if the substantive services are provided to the investment company only.

describe our business activities and our intentions as follows in our Annual Report:

Subject to additional financing, the Company plans to create a portfolio of Digital Assets including bitcoin and other “protocol tokens” to provide investors a diversified pure-play exposure to the bitcoin and blockchain industries. The Company intends to acquire Digital Assets through open market purchases. The Company has not participated in any initial coin offerings as it believes most of the offerings entail the offering of Digital Securities and require registration under the Securities Act and under state securities laws. Since about July 2017, initial coin offerings using Digital Securities have been (or should be) limited to accredited investors. Because we cannot qualify as an accredited investor, we do not intend to acquire coins in initial coin offerings or from purchasers in such offerings. Additionally, the Company may acquire Digital Assets by resuming its transaction verification services business through outsourced data centers and earning rewards in Digital Assets by securing their respective blockchains. The Company will carefully review its purchases of Digital Securities to avoid violating the Investment Company Act of 1940 (the “Investment Company”) and seek to reduce potential liabilities under the federal securities laws.

As described above, the Company is in the early stages of a Digital Assets business, including bitcoin and other “protocol tokens” and is working on building a business to obtain digital assets and which may entail running specialized servers which solve a set of prescribed complex mathematical calculations in order to add a block to a blockchain and thereby confirm

Digital Asset transactions. Further, the Company does not provide investment services or investment management services to other entities. The Company does not have significant assets or liabilities other than those relating to cash and digital assets as it is in the early stages of building its business.

Of note, the 1940 Act sets out a three-pronged definition of an investment company. The prong that causes operating companies the most trouble is the 40% Test contained in Section 3(a)(1)(C). Under this section, companies with “investment securities” comprising more than 40% of their “total assets (exclusive of Government securities and cash items)” can fall within the definition of investment company. Under Rule 3a-1, a company that fails the 40% Test will nevertheless be excluded from the definition of investment company if no more than 45% of the value of its “total assets (exclusive of Government securities and cash items)” are derived from “investment securities,” and no more than 45% of its net income after taxes is attributable to “investment securities.” In applying both the 40% Test and the 45% Tests, Government securities and cash items are excluded from investment securities. We do not believe that bitcoin meet the definition of an investment security and we would therefore not be in violation of Section 3(a)(1)(C) as of March 31, 2018. This is further supported by Jay Clayton’s recent testimony in front of Congress on April 27, 2018 where he commented on bitcoin as a security stating before the United

States House Appropriations Committee that “A pure medium of exchange, the one that’s most often cited, is Bitcoin, as a replacement for currency, that has been determined by most people to not be a security.” Since the transcript of Mr.

Clayton’s testimony on the Commission’s website includes only his planned remarks and does not contain his answers to questions from Representative, we refer to a link on The U.S. House of Representatives Committee on Appropriations website here:

https://appropriations.house.gov/calendar/eventsingle.aspx?EventID=395258, his statements on digital currencies begin at 32min and 16 seconds into the video. Therefor we believe that it is no longer our consideration as to whether we are an investment company, but rather that it has been clearly defined by implications made by the SEC Chairman in front of Congress. Our focus on bitcoin has kept us under the 40% limit; further we and our counsel believe that ether, our other cryptocurrency, is not presently a security.

GAAP provides the following guidance on sources of evidence of the entity’s business purpose and substantive activities:

946-10-55-6:

Evidence of the entity’s business purpose and substantive activities may be included in the entity’s offering memorandum, publications distributed by the entity, and other corporate or partnership documents that indicate the investment objectives of the entity. Evidence of the entity’s business purpose and substantive activities also may include the manner in which the entity presents itself to other parties (such as potential investors or potential investees). For example, an entity that presents its business to its investors as having the objective of investing for capital appreciation has characteristics that are consistent with the business purpose and substantive activities of an investment company. Alternatively, an entity that presents itself as an investor whose objective is jointly developing, producing, or marketing products with its investees has characteristics that are inconsistent with the business purpose and substantive activities of an investment company.

See our response above, which includes an excerpt of the description of our business purpose and plans of substantive activities as described in the prospectus at page 1. Our investor relations materials further support our goal of creating a portfolio of digital assets including bitcoin and other “protocol tokens”, potentially acquiring digital assets by resuming our transaction verification services business and identifying additional acquisition opportunities in the blockchain space. Our characteristics are inconsistent with the business purpose and substantive activities of an investment company. Further, we have been involved in the bitcoin and blockchain industry since 2013 and our activities to date and our proposed activities are not one of an investment company. For example, in 2014, 2015 and 2016 a substantial portion of our revenue was derived from our digital currency mining operation and we also had revenue from our ecommerce platform in 2013, 2014, 2015, 2016 and 2017.

GAAP provides the following additional guidance on exit strategies of investment companies:

946-10-55-7:

An entity’s investment plans also provide evidence of its business purpose and substantive activities. Accordingly, an investment company whose business purpose and substantive activities include realizing capital appreciation should have an exit strategy for how it plans to realize the capital appreciation of its investments. Although the entity may not yet have determined the specific method or timing of disposing of an investment, the fact that it has identified potential exit strategies through which it can realize capital appreciation provides evidence that its business purpose and substantive activities are consistent with those of an investment company. The entity need not document specific exit strategies for each individual investment held for the purpose of realizing capital appreciation but should identify potential exit strategies for different types or portfolios of investments held with the purpose of realizing capital appreciation.

Disposal of investments only during liquidation or to satisfy investor redemptions are not exit strategies. Therefore, an entity should have a plan to dispose of its investments before liquidation when its business purpose and substantive activities include realizing capital appreciation. An investment company whose business purpose and substantive activities are to invest for returns only from investment income does not require an exit strategy for its investments.

In its investment presentation, the Company presents itself as “an early mover in the blockchain and digital currency ecosystems and the first “Pure Play” U.S. public company focused on bitcoin and blockchain technologies.” It discusses looking at acquisitions and growth in the blockchain space versus exit plans for capital appreciation. Further, we have a history of looking to grow through acquisition and while non-of those plans have come to fruition our future plans are consistent with our past actions.

GAAP provides the following additional guidance regarding activities that would be inconsistent with the characteristics of an investment company:

946-10-55-8:

An entity would not be an investment company if the entity or its affiliates obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income. Examples of relationships and activities that would be inconsistent with the characteristics of an investment company include any of the following:

The entity or its affiliates acquire, use, exchange, or exploit the processes, assets, or technology of an investee or its affiliates.

This includes the entity or its affiliates having disproportionate or exclusive rights to acquire assets, purchase an asset from an investee if the asset’s development is deemed successful).

There are other arrangements between the entity or its affiliates and an investee or its affiliates to jointly develop, produce, market, or provide products or services.

c.

An investee or its affiliates provide financing guarantees or assets to serve as collateral for borrowing arrangements of the entity or its affiliates to provide returns or with the objective of providing returns other than capital appreciation or investment income. The guidance in this paragraph does not prohibit an investment company from using its investments in its investees as collateral for any of its borrowings.

d.

An affiliate of the entity holds an option to purchase from the entity ownership interests in an investee at an amount other than fair value.

e.

There are transactions between the entity or its affiliates and an investee or its affiliates that meet any of the following:

They are on terms that are unavailable to entities that are not affiliates of the investee.

They are not at fair value or are not conducted at arm’s length.

They represent a substantive portion of the investee’s or the entity’s business activities, including business activities of affiliates of the entity or affiliates of the investee.

946-10-55-9:

An investment company may have a strategy to invest in more than one investee in the same industry, market, or geographical area to benefit from synergies that increase the returns from capital appreciation and investment income from those investments. Transactions between an entity’s investees should not affect the entity’s assessment of whether it is an investment company unless those transactions result in the entity obtaining returns or benefits other than capital appreciation or investment income.

Company has the objective of obtaining returns from capital appreciation or investment income. As discussed above, the Company is attempting to provide investors a diversified pure-play exposure to the bitcoin and blockchain industries.

GAAP provides the following additional guidance with respect to activities that an investment company may perform for its investees:

946-10-55-10:

An investment company may provide both of the following services to an investee, either directly or through an investment in an entity that provides those services, only if those services are provided for the purpose of maximizing returns from capital appreciation, investment income, or both (rather than other benefits) and do not represent a separate substantial business activity or separate substantial source of income for the investment company:

Assistance with day-to-day management of the operations of an investee.

Financial support, such as a loan, capital commitment, or guarantee.

described above, the Company provides services to develop substantial business activities designed to further the Company’s overall business strategies and are not for the sole purpose of maximizing returns from capital appreciation of securities and/or investment income on investees. The Company does not currently have any investee

Read in the reply ↗

We note your assertion that there is currently no authoritative literature applicable to your digital assets. Please analyze for us whether your digital assets meet the definition of an intangible asset and the consideration you gave to the application of that accounting to digital assets you acquired from others and digital assets you obtained through mining.

Digital assets technically meet the definition of an intangible asset, as intangible assets are those that lack physical substance. This model results in holdings of digital assets being recorded at the cost of acquisition, subject to impairment. That is, the model will only capture declines in the value of the digital assets, not increases.

our opinion, while digital assets meet the strict definition of intangible assets, this model does not best reflect the nature and economics of digital assets, which have unique characteristics that differ from most intangible assets.

Rest of the answer

While digital assets have no physical substance, many are traded on exchanges (unlike other intangibles), are designed to be accepted as payment for other goods and services (which is very infrequent for intangibles), and their value is subject to significant volatility. The

Company believes these differences are fundamental and point to the appropriateness of a fair value model.

This position is reflected in and consistent with “PWC’s Point of View Cryptocurrencies” (March 2018). Notwithstanding this accounting discussion, the Company will fully comply with the Commission’s accounting rules as administered by the

Staff.

Please note that the Company has only acquired digital assets from others. Although it may be a strategy going forward, the Company does not currently have digital assets that were obtained through mining. However, we would view the assets the same whether we acquired them from others via a fee for acquisition or obtained them through mining via verification services.

Should the staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Michael D. Harris, the Company’s legal counsel, at 561-471-3507, mharris@nasonyeager.com.

Read in the reply ↗

Your response to prior comment 4 refers to information on your website indicating that you are “the first pure-play” U.S. public company involved with digital assets and block chain technologies. Your disclosure states that you plan to provide your investors with a “diversified pure-play exposure to bitcoin and blockchain technologies.” Please define the term “diversified pure-play” and explain what distinguishes

Rest of the question

you from other public companies with similar goals and operations.

Pure-play refers to a company that focuses only on a particular product or activity. We do not intend to operate outside of the Digital

Asset industry, and, as such, we are a pure-play company within the Digital Asset industry. We consider ourselves to be a diversified pure-play business because we are not limiting our assets to a single type of Digital Asset and may purchase a variety of Digital

Assets that appear to benefit our investors, or acquire businesses in the Digital Asset industry, subject to the limitations contained within the Amendment regarding Digital

Securities.

Rest of the answer

To our knowledge we are one of a few public companies intending to acquire both Digital Assets and businesses in the Digital Asset industry.

In order to provide clarification to investors regarding our goals and operations we have removed the term “diversified pure-play” from the Amendment on pages 1, 29, and 40 and have added disclosure regarding our company’s focus on pages 1, 29, and 40. For obvious reasons we have not edited the past financial statements attached to the

Amendment and two remaining references in the financial statements refer to the term “diversified pure-play.”

We have however updated our disclosure in our financial statements for the period ending June 30, 2018.

Read in the reply ↗

In the glossary, you state that digital assets are commonly referred to as “cryptocurrency or virtual currency.” Please clarify that the use of these terms is not indicative of the regulatory or accounting distinction of digital assets and that digital assets therefore may be deemed securities or other types of assets. In addition, explain that not all digital assets function as a medium of exchange.

We have added explanatory language to the definition of Digital Asset on page iii. Read in the reply ↗

We note that your portfolio will focus only on bitcoin and “other protocol tokens.” Please explain how protocol tokens differ from other types of tokens, and discuss whether there are any material challenges related to this limitation. Further, clarify how your portfolio will provide investors with exposure to bitcoin and blockchain industries.

have amended the definition of Digital Asset to state that the use of the word “token” is not indicative of any regulatory or accounting distinction with the term Digital Asset. Additionally, we have changed the word “exposure” to “indirect ownership of” on pages 1 and 29.

anticipate that our holdings will include Digital Assets that are not securities, such as bitcoin and ether, which will thus provide investors with indirect ownership of Digital Assets and, if we can make any acquisitions, one or more companies in the blockchain industry since our business strategy will focus exclusively

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on the Digital

Asset industry and related business ventures.

have removed the term “protocol tokens” from the text of the Amendment on pages 1, 29, and 40. For obvious reasons we have not edited the financial statements attached to the Amendment and two remaining references in the financial statements refer to the term “protocol tokens.” We have update our disclosure in the footnotes for our financial statements for the period ending June 30, 2018.

Read in the reply ↗

We note the prospectus does not include the information that you provided in response to prior comment 3. Please revise. Further, we note that such response indicates that you may otherwise pursue strategic opportunities involving the acquisition of “businesses using blockchain technology and those involved with digital assets.” Please clarify how such opportunities may be different from, and synergistic to, your

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creation of a portfolio of digital assets and the potential resumption of your transaction verification services. Explain the scope of the blockchain technology applications and digital asset activities that you would consider acquiring. In this regard, we note prior disclosure indicating that you were pursuing a company that owns and operates a digital asset exchange.

have added language to the Amendment regarding our current business model framework and acquisition criteria on pages

1 and 41.

Owning

Digital Assets and acquiring businesses naturally differ but each provides a unique opportunity within the Digital Asset industry. Acquiring Digital Assets and acquiring businesses are synergistic because they are in the same Digital Asset industry, however, they are by their very nature, different business opportunities since one involves acquiring assets whereas the other involves acquiring new companies and pursuing related but distinct business

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opportunities.

are seeking to acquire businesses using blockchain technology and those involved with Digital Assets including those that are similar to our current and past business ventures of acquiring Digital Assets and Digital Asset mining. While it is impossible to list all potential Digital Asset or blockchain related business ventures that we would consider engaging in, we intend to evaluate a variety of different related business ventures to determine whether they are potential acquisition targets. Blockchain companies currently operate in a variety of business, finance, real estate, and technology related sectors in order to bring the verification systems associated with decentralized blockchain technology into new markets.

There are a variety of blockchain related businesses that we would consider entering into business ventures with in order to expand our business into the Digital Asset and blockchain market.

evaluating potential Digital Asset and blockchain technology acquisitions, we intend to analyze the scope of the business involvement with Digital Assets and blockchain technology and the potential future ventures of the business regarding their blockchain technology and any future ventures. As discussed in our prior response letter, with the assistance of our counsel we intend to verify that

Digital Assets and business acquired by us do not cause us to acquire securities to the extent that we would be required to register as an Investment Company under the Investment Company Act of 1940.

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You state that you plan to create a portfolio of digital assets. In order to facilitate our evaluation of your analysis of ASC 946, please tell us what this means and clarify your business purpose for creating this portfolio. In this regard, explain whether you intend to use the portfolio as part of your operations and, if so, how; or tell us whether you intend to hold these assets for appreciation.

have revised the disclosure of our purpose to clarify that the sole objective of BTCS is not to create a portfolio of

Digital Assets but rather to acquire Digital Assets and controlling interests in companies within the blockchain industry.

We have removed the term “portfolio” from the Amendment apart from two remaining references in the financial statements. Read in the reply ↗

In response to comment 5, you state the “company has the objective of obtaining returns from capital appreciation or investment income.” Please explain further how this statement supports your conclusions that you do not meet the fundamental characteristics of an investment company pursuant to ASC 946-10-15-6.

ASC

946-10-15-6 states that “An investment company has the following fundamental characteristics:

a) is an entity that does both of the following:

Obtains funds from one or more investors and provides the investor(s) with investment management services

Commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income, or both.

b) entity or its affiliates do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally

Rest of the answer

attributable to ownership interests or that are other than capital appreciation or investment income.

do not meet the fundamental characteristics of an investment company pursuant to ASC 946-10-15-6 because we do not provide investment management services and our sole business purpose and only substantive activities are not to invest our funds solely for returns from capital. We have disclosed that subject to additional capital we may resume our transaction verification services business

(i.e. Digital Asset mining) and are looking to acquire a controlling interest in blockchain companies. As such, we do not believe that we meet the fundamental characteristics of an investment company pursuant to ASC 946-10-15-6.

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A comparison of your December 31, 2017 Form 10-K to your March 31, 2018 Form 10- Q suggests that you have changed classifications on the statements of operations and cash flows related to your digital assets. Please identify the changes for us and provide an analysis, with specific citation to authoritative literature, supporting the appropriateness of the revised classifications.

Given our lack of cash we decided to temporarily suspend our digital asset operations until we are recapitalized. Therefore, effective

January 1, 2018, we decided that realized losses on the sale of Digital Assets and the revaluation of Digital Assets should be recorded as a component of other (expenses) income and proceeds from the sale of Digital Assets should be classified as investing activities until we resume our digital asset operations. We are unaware of any authoritative literature concerning the classification of Digital Assets.

Rest of the answer

Considering that BTCS is no longer in the Digital Asset mining business we determined that any profits and realized losses should be recorded in this fashion.

Note

4. Summary of Significant Accounting Policies

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You state in your response to prior comment 5 that your digital assets meet the definition of an intangible asset. While we continue to assess your responses related to investment company accounting, please note that we are unable to identify a scope exception in ASC 350-30 that permits the measurement of intangible assets at fair value in each reporting period.

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Please describe for us your basis for measuring your digital assets at fair value. If your digital assets are within the scope of ASC 350-30, please revise your accounting to comply with those requirements.

While digital assets may meet the definition of an intangible asset in ASC 350-30, paragraph 15-3 states that only the following transactions are within its scope:

a.

Intangible assets acquired individually or with a group of other assets (but not the recognition and initial measurement of those acquired in a business combination or an acquisition by a not-for-profit entity) b.

assets (other than goodwill) that an entity recognizes in accordance with Subtopic 805-20 or 958-805 after they have been initially recognized and measured, except for those identified in the following paragraph

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c.

Costs of internally developing identifiable intangible assets that an entity recognizes as assets note that we were receiving consideration in 2016 in exchange for providing verification services (a revenue transaction) rather than acquiring an intangible asset either individually, as a group, or as part of a business combination. Therefore, we concluded that the revenue transaction is not within the scope of the transactions listed in ASC 350-30-15-3(a) and (b).

Under

ASC 350-30-25-3, the costs of internally developing intangible assets are recognized as an expense when incurred. PwC’s

Point of View, Cryptocurrencies Time to Consider Plan B (March 2018), provides the following further guidance that might apply to the recognition of intangible assets for miners:

When a Digital Asset is purchased, the intangible asset would be measured at the price paid or consideration given to obtain the Digital

Asset. However, the question for miners is more complicated. Unlike a direct purchase, miners are awarded units, but they incur costs of computing equipment, electricity, and other expenses. At issue for the miners is whether the associated costs should be capitalized as an intangible asset or expensed.

There is not a lot of guidance on accounting for the costs incurred to internally-develop intangible assets, but it generally limits capitalization. Notwithstanding, existing guidance may not preclude capitalization for certain costs incurred by miners to obtain

Digital Assets. Miners may need to analogize to other areas of US GAAP where explicit guidance exists (e.g., internal-use software or film production).

miners of Digital Assets, this would mean capitalizing as an intangible asset the costs of the computing equipment, electricity, and other expenses incurred in performing the verification service. This would result in a different amount that is recognized as an intangible asset than a company that purchases an equal amount of the Digital Asset on an exchange.

further issue with classifying Digital Assets as an intangible asset is the impairment model associated with the subsequent accounting for intangible assets. Presumably, a Digital Asset would be subject to amortization, in which case it would be subject to impairment if it is subsequently determined to have a finite useful life. Because the prices of many Digital Assets are extremely volatile, there are practical challenges with making judgments associated with when the intangible assets are “more likely than not” to be impaired.

Digital Assets meet the technical definition of intangible assets in ASC 350-30, that definition was developed based on guidance that was issued more than 40 years ago in APB Opinion No. 17, Intangible Assets, which did not contemplate the nature of Digital

Assets. Rather, the guidance focuses on intangible assets like trademarks, patents, and customer relationships that are typically held for long periods of time and do not have quoted prices in active markets.

Due to the issues noted above, we concluded that the Digital Assets received in exchange for performing a verification service is not within the scope of the three transactions listed in ASC 350-30 and that it would not be appropriate to analogize to the guidance in ASC 350-30 for the subsequent measurement of Digital Assets. Rather, BTCS concluded that it is more appropriate to analogize to the guidance in ASC 825 on accounting for financial instruments in order to subsequently measure the Digital Assets that it receives in exchange for providing verification services.

Should the staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Michael D. Harris, BTCS’s legal counsel, at 561-471-3507, mharris@nasonyeager.com.

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We do not believe that the digital assets you hold meet the requirements in ASC 825 to permit application of fair value option. Based on your responses, we also understand that the digital assets you hold are not rights to cash or ownership interests in an entity.

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Therefore, it appears that the subsequent measurement of your digital assets is subject to the requirements for indefinite-lived intangible assets in ASC 350-30. We also note that your digital assets are not productive assets and therefore cash flows from their purchase or sale do not appear to meet the definition of investing activities. If our understanding is correct, please revise your financial statements accordingly.

Inc. (the “Company”) submits this letter in response to the Staff’s letter dated August 21, 2018 (the “Comment

Letter”). In the Comment Letter the Staff concluded that the Company had not complied with generally accepted accounting principles (“GAAP”) in its treatment of its Digital Assets.

Following communications with the Staff, the Company concluded that the Staff’s position was correct with respect to GAAP, and the

Company filed a Form 8-K on September 21, stating that it had agreed to amend its financial statements for the year ended December

31, 2017 contained in the Form 10-K for

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that year and in the Form 10-Qs for the periods ended March 31 and June 30, 2018.

The

Company is filing a Form 10-K/A and Form 10-Q/As restating its financial statements for the year ended December 31, 2017 and the periods ended March 31 and June 30, 2018. The Company is also filing an amendment to its Registration Statement on Form S-1 containing the revised financial statements.

In addition to restating its audited financial statements for the year ended December 31, 2017, the Form 10-K/A has been updated to the most recent practicable date, except for those line items which are required to be stated at December 31, 2017 and December

31, 2016. The Form S-1 contains not only the restated financial statements but disclosure which is similar to the disclosure in the Form 10-K/A, except for those items expressly only required in the Form 10-K and simple changes such as using the word “prospectus” or the phrase “Form 10-K/A”.

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We note that you are registering an additional 55,000,000 shares of common stock underlying Series C Warrants that were issued for no consideration in October 2018. Given the number of shares being registered for resale on behalf of the selling shareholders in relation to the number of your outstanding shares held by non-affiliates, the transaction appears to be a primary offering.

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Please provide us with your analysis as to why you believe this is not a primary offering such that the selling shareholders are identified as underwriters and the shares are offered at a fixed price. For guidance, refer to Compliance and Disclosure Interpretations, Securities Act Rules, Question 612.09.

We have eliminated the common stock issued upon exercise of the Series C Warrants. This reduces the number of shares that we attempting to register for resale under the Amendment from 122,939,632 to 67,939,632. Based upon the table below, we respectfully submit that the offering contemplated by the Registration Statement is a valid offering by or on behalf of the selling shareholders that may be registered for sale on a continuous basis pursuant to Rule 415(a)(1)(i) under the Securities Act of 1933.

following table sets forth the Registered Shares as set forth in Amendment# 7 and Amendment#

Rest of the answer

8 as well as the Registered Shares as a percent of BTCS’ non-affiliate public float.

#7

(10/12/2018)

#8

(10/31/2018)

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You state that the Series C Warrants were issued for no consideration. We note, however, that the form of warrant that has been filed as an exhibit indicates that the warrants were issued “for value received.” Please reconcile, and describe the value or benefit that you received in exchange for such issuance.

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If you received no value or benefit, please provide a legal analysis as to whether the warrants were validly issued and fully paid under state law.

Our counsel agrees that Nevada law does not permit the issuance of warrants to the holders of an outstanding class or series except on a pro rata basis. Since the warrants were not issued on a pro rata basis, we have cancelled them pursuant to a letter agreement executed by each Series C Warrant holder. A copy of the form of response letter is filed as Exhibit

10.32. An appropriate change has been made at page 39 of the Prospectus. Read in the reply ↗

We note that a number of shares of common stock and warrants will become issuable upon the consummation of the reverse stock split. Please provide tabular disclosure that identifies each of your contractual agreements to issue additional shares or warrants and the number of shares or warrants that will become issuable under each agreement upon consummation of the reverse stock split.

As revised, the Preliminary Proxy Statement includes the following additional disclosure (please see page 3):

The specific contractual agreements pursuant to which we will issue additional shares following the reverse stock split, and the number of shares issuable under each (share numbers are post-split), are listed in the table below.

Rest of the answer

The obligation to issue the shares existed prior to the reverse stock split, but the shares were previously unissuable because the Company lacked sufficient authorized capital.

Securities and Exchange Commission

Page

Contractual

Agreement

Shares issuable

Subscription Agreement dated

January 19, 2015 (Most Favored Nations adjustment – additional shares) Subject to reduction based on 4.99% ownership limitations.

17,110,374

Subscription Agreement dated January

19, 2015 (Most Favored Nations adjustment – additional warrants)

42,775,933

Subscription Agreement dated April 20,

2015 (Most Favored Nations adjustment – additional shares) Subject to reduction based on 4.99% ownership limitations.

Read in the reply ↗

You disclose that you are in default with respect to certain of your debt obligations. Please provide more specific disclosure as to any penalties you have incurred as a result of this default. Investors should understand in practical terms the cost to the company of the failure to effectuate the reverse stock split and the resulting risks.

revised, the Preliminary Proxy Statement includes the following additional disclosure (please see page 4):

Because we previously have been unable to comply with our contractual obligations to issue shares upon the conversion of convertible notes and the exercise of warrants, we have defaulted under the terms of certain agreements with investors, which has caused the Company to incur the following penalties:

Under the terms of our 5% Original Issue Discount 10% Senior Convertible Note Due September 16, 2016 (issued in December 2015) in the original principal amount of $1,450,000, our default

Rest of the answer

on the repayment of the loan resulted in the application of a default interest rate in the amount of 24% per year, the reset of the note conversion price to 60% of the lowest closing price on the OTCQB during the prior 20 trading days, and the entire principal and interest of the notes, plus an additional 30% penalty, coming due immediately.

As of December 31, 2016, the face value of the senior notes, interest and penalties was $1,019,267 and is continuing to increase by $579 a day. In addition, if holders of the notes attempt to convert their notes and are unable to, they will be entitled to liquidated damages equal to $1,000 per day for each $100,000 of such purchaser’s original subscription amount. As of December

31, 2016, the Company is booking a liquidated damages liability of $2,856,500 with respect to the senior notes, which is continuing to increase by $14,500 a day, even though no conversion requests have been made.

In addition, under the terms of approximately 6.7 million (pre-split) warrants issued in December 2016 in connection with the note issuances described above, the exercise price of each warrant was reduced to the default exercise price of the related notes, and the warrant holders will also be entitled to damages for any buy-in occurring as a result of the Company’s failure to deliver certificates upon an attempted exercise as described above.

the terms of our 20% Original Issue Discount Junior Convertible Notes Due December 5, 2016 (issued in June 2016) in the original principal amount of $125,000, a default occurred due to the default on our senior notes and resulted in the application of a default interest rate in the amount of 24% per year, the reset of the note conversion price to 60% of the lowest closing price on the

OTCQB during the prior 20 trading days, and the entire principal and interest of the notes, plus an additional 40% penalty, coming due immediately. As of December 31, 2016, the face value of the junior notes, interest and penalties was $199,267 and is continuing to increase by $117 a day. In addition, if holders of the notes attempt to convert their notes and are unable to, they will be entitled to liquidated damages equal to $1,000 per day for each $100,000 of such purchaser’s original subscription amount.

As of December 31, 2016, the Company is booking a liquidated damages liability of $228,750 with respect to the junior notes, which is continuing to increase by $1,250 a day, even though no conversion requests have been made.

Read in the reply ↗

You disclose that you issued one hundred shares of Series A Preferred Stock to Mr. Allen in order to effectuate the reverse stock split. Exhibit 3.1 to the Form 8-K filed on December 9, 2016 states that these shares have total voting power that is equal to one vote more than the total combined voting power of the common stock and all other series or classes of equity of the company.

Rest of the question

Moreover, we note that these shares may only vote on a proposal to increase the authorized shares of common stock or effectuate a reverse stock split. Please provide us with an analysis supporting your conclusion that this is permissible under Nevada law.

Our analysis of the relevant provisions of the Nevada Revised Statutes (the “NRS”) is set forth below.

ability of the Board of Directors (the “Board”) to designate a series of preferred stock is set forth in NRS 78.195, which provides that a corporation’s articles of incorporation may vest authority in the board of directors to prescribe, the classes, series and the number of each class or series of stock and the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of stock which shall be described in the board resolution setting

Rest of the answer

forth such designation and the certificate of designations filed with the state.1

Company’s Articles of Incorporation specifically adopt this provision of the NRS. Article III, Section 3(a) of the Company’s

Articles of Incorporation filed with the Nevada Secretary of State on April 15, 2008, as subsequently amended, provides that board of directors is hereby vested with authority from time to time to provide by resolution for the issuance of shares of Preferred

Stock in one or more series… and to prescribe with respect to each series the voting powers, if any, designations, preferences, and relative, participating, optional, or other special rights, and the qualifications, limitations, or restrictions relating thereto.

1 NRS

78.195(1)

It further provides,

Unless the board of directors provides to the contrary…. neither the consent by series or otherwise of the holders of any outstanding

Preferred Stock nor the consent of the holders of any outstanding common stock shall be required for the issuance of any new series of preferred stock regardless of the whether the rights and preferences of the new series of preferred stock are senior or superior, in any way, to the outstanding series of preferred stock or common stock.

Further, under the NRS, the ability of the Board to structure the relative voting rights of the holders of that preferred stock, limit those voting rights to particular matters, and make the Company’s redemption rights dependent upon the happening of a particular corporate event are set forth in NRS 78.037, which provides that a corporation’s articles of incorporation may include provisions creating, defining, limiting or regulating…the rights, powers or duties of…any class of the stockholders.2

NRS

78.195 also provides that the voting powers, designations, preferences, limitations, restrictions and relative rights for the shares of a class or series of stock may be made dependent upon any fact or event which may be ascertained outside the articles of incorporation if the manner in which a fact or event may operate upon the voting powers and other rights is stated in the articles.3 A “fact or event” may include the occurrence of an event, including, without limitation, a determination or action by…the corporation itself.4 the directors of a corporation may take action to protect the interests of the corporation and its stockholders, including, but not limited to, adopting or signing plans, arrangements or instruments that grant or deny rights, privileges, power or authority to a holder or holders of a specified number of shares or percentage of share ownership or voting power.5

NRS 78.037(2)

NRS 78.195(4)

NRS 78.195(5)

Id.

Together, the above provisions give the Company’s Board the authority to designate the Series A Preferred Stock, endow it with voting rights superior to the common stock, provide that those voting rights are limited to voting on the Company’s reverse split proposal, and provide that the stock is redeemable upon the Company’s amendment of its Articles of Incorporation to increase available capital.

ability of the Company to effect its reverse stock split is set forth in NRS 78.2055, which provides:

otherwise provided in the articles of incorporation, a corporation that desires to decrease the number of issued and outstanding shares of a class or series held by each stockholder of record at the effective date and time of the change without correspondingly decreasing the number of authorized shares of the same class or series may do so if:

(a) The board of directors adopts a resolution setting forth the proposal to decrease the number of issued and outstanding shares of a class or series; and

(b) The proposal is approved by the vote of stockholders holding a majority of the voting power of the affected class or series, or such greater proportion as may be provided in the articles of incorporation, regardless of limitations or restrictions on the voting power of the affected class or series.6 discussed above, the Company’s Articles of Incorporation, through the provisions authorizing the Board to designate a series of preferred stock without shareholder approval, and the Company’s designation of Series A Preferred Stock with special voting rights related to the capital increase, opt out of the default provisions of NRS 78.2055, as permitted by the language

“unless otherwise provided in the articles of incorporation,” to provide for the process utilized by the Company to approve the reverse split.

Finally, it was permissible for the Company to utilize a written consent action under NRS 78.320, which provides that otherwise provided in the articles of incorporation or the bylaws, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required.7

Read in the reply ↗

Please expand the table on page 3 to describe your capitalization both before and after the reverse stock split, taking into account your discussion on page 2 regarding the interest of certain persons in the adoption of the reverse split. The revised table should include the number of shares (i) authorized (ii) issued and outstanding, and (iii) reserved for issuance both before and after the reverse stock split.

Rest of the question

Please also include the number of shares available for issuance before and after the split.

revised, the Preliminary Proxy Statement includes the following tabular disclosure (please see page 5):

number of shares of our common stock authorized, outstanding and reserved for issuance before and after the reverse stock split are detailed below:

Authorized

Issued and Outstanding (1)

Reserved for Issuance (2)

Available for Issuance

Before

Reverse Split

975,000,000

952,756,004

22,243,996

After

15,879,267

425,259,961

533,860,772

(1) and outstanding shares before Reverse Split and after Reverse Split exclude 13,000,000 shares and 216,667 shares, respectively, held in treasury

Rest of the answer

which are reserved for issuance.

(2)

Excludes shares that may need to be issued based on further resets of the note conversion prices or favored nations provisions.

number of shares of owned and owed to interested persons is detailed below:

(Excludes Owed Securities)

(Including Issuance of Owed Securities)

Common

Warrants

Charles Allen

34,269,950

218,334

34,488,284

1,561,285

1,607,143

3,168,428

Michal Handerhan

27,561,787

27,780,121

1,449,482

993,758

2,443,240

61,831,737

436,668

62,268,405

3,010,767

2,600,901

5,611,668 foregoing table excludes a reduction in aggregate of 24,000,000 shares before the Reverse Split (400,000 shares after the Reverse

Split) that will be redeemed from Mr. Allen and Mr. Handerhan (12,000,000 shares before the Reverse Split per interested person) by the Company for no consideration pursuant to the voluntary escrow agreement dated February 19, 2016 by and between the interested parties and the Company. The share redemption is a result of the Company’s failure to list on a National Stock Exchange and complete its merger with Spondoolies Tech Ltd. prior to December 31, 2016.

Should the staff have any additional questions or comments after reviewing this response letter, we would appreciate an opportunity to discuss these comments or questions with the staff prior to the distribution of another comment letter. Please direct any questions concerning this response letter to Michael D. Harris, the Company’s legal counsel, at 561-471-3507, mharris@nasonyeager.com.

Read in the reply ↗

You appear to be a shell company, as defined in Rule 405. In particular, we note that you appear to have nominal operations and nominal assets. Please disclose that you are a shell company on your prospectus cover page and add a risk factor that highlights the consequences of your shell company status.

Rest of the question

Discuss the prohibition on the use of Form S-8 by shell companies; enhanced reporting requirements imposed on shell companies; and the conditions that must be satisfied before restricted and control securities may be resold in reliance on Rule 144. Also describe the potential impact on your ability to attract additional capital. Alternatively, provide us with a detailed analysis addressing why the individual factors set forth in the definition of the term shell company are not applicable to you.

Rule

405 under the Securities Act of 1933, as amended (the “Securities Act”) defines a shell company as “a registrant, other than an asset-backed issuer as defined in Item 1101(b) of Regulation AB, that has: (1) no or nominal operations; and (2) either: (i) no or nominal assets; (ii) assets consisting solely of cash and cash equivalents; or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets.” The Company is not considered a “shell” company under this definition as our business plan is well formed and our operations and assets exceed the classification

Rest of the answer

as “nominal”.

1901 N Moore St. | Suite

700 | Arlington, VA 22209 | (248) 764-1084

Although the “asset” component of the definition of Shell contained in Rule 405 is one prong of this analysis, the first essential element of the definition seeks to assess “activity” levels of registrants. Without being an inactive company, the asset tests do not appear to be relevant in the determination of Shell status under Rule 405. By way of analogy, the importance of activity is identified specifically in components of Rule 144, when referencing the Shell definition. Rule 144 (i)(1) excludes companies from the definition of Shell company that are development stage companies pursuing an actual business, a business combination shell company (as defined in Rule 405) or an asset-backed issuer. These provisions provide special guidance and provide additional factors required when considering the Shell status of an issuer that is operating but may not have significant assets reported on its financial statements to satisfy the second tier inquiry. We nonetheless provide below an explanation of why the Company does not meet the “inactivity” element of the Shell definition, and further explain why even if it did, it has significant assets.

Company’s Operations

As explained in our Registration Statement, our principal business is conducted through our wholly-owned subsidiaries, BitcoinShop.us,

LLC (“BitcoinShop”) and BTCS Digital Manufacturing (“BTCS Digital”). As further described in our Registration

Statement, we have been actively involved in developing and continue to expand various areas of business: (i) a beta ecommerce marketplace which accepts a variety of digital currencies and continues to be enhanced by adding new functions designed to add value to the customer experience; (ii) a beta storage solution designed to securely store digital currency; (iii) a transaction verification services business capable of generating bitcoins (i.e. bitcoin mining); (iv) a new focus on integrating our blockchain technologies and capabilities into other uses outside of bitcoin mining.

BitcoinShop has, since July 28, 2013, and the Company at a consolidated level has, since February 5, 2014, been engaged in various digital currency platforms. As noted in the Registration Statement, we host and maintain a web ecommerce marketplace that offers over

250,000 products, for which customers have an option to pay using digital currencies. Since its inception, BitcoinShop has strove to enhance its ecommerce marketplace with value added services. For example, in early 2014, we redesigned the ecommerce marketplace and added our “Intelligent Shopping Engine” functionality, which allows customers to find completive prices on products from over 250 retailers.

Furthermore, we have a history of expanding on our existing technologies, know-how and capabilities to develop additional sources of growth and/or revenue. For example, through our wholly owned subsidiary BTCS Digital, we added a transaction verification business with the capacity to mine bitcoins and to apply our technologies to providing secure verification services. Recently, we purchased

100 digital currency mining servers for a purchase price of $223,500 and used digital currency mining servers for $14,480, which servers were put into service in an 83,000 square foot facility we recently leased. In fact, as disclosed in the Amendment, we generated $175,753 in revenues during the six month period ended June 30, 2015 from our transaction verification business.

Company Has More than Nominal Assets we continue to believe that based solely on the fact that the Company has consistently had material operations and has added to those operations it does not meet the Shell definition in Rule 405, set forth below is a description of our more than “nominal” assets. As of June 30, 2015, we had an aggregate of $2,006,211 of non-financial and non-cash assets consisting of websites, equipment and a 6.6% investment interest in Spondoolies Tech Ltd., a transaction verification server manufacturer. Notably, our equipment has been and continues to yield revenues. In addition, we anticipate that we will be able to leverage the capabilities of our servers to increase our revenues.

set forth in the Amendment and our recently filed Form 10-Q for the period ended June 30, 2015, our assets include:

● $303,240

– Cash

● $46,100

– Digital Currencies

● $54,577

– Prepaid Expense and Other Current Assets

● $497,558

– Property and Equipment

● $1,500,000

– Investment (approximately 6.6% of Spondoolies Tech Ltd.)

● $8,653

– Websites

● $61,515

– Deposits

Read in the reply ↗

We note that you are registering the offer and resale of 42,106,460 shares of common stock previously issued or to be issued upon conversion of outstanding warrants. Nonaffiliates of the company appear to hold 75,526,419 shares of your common stock.

Rest of the question

Based on the number of shares being registered relative to the number of shares of common stock held by non-affiliates, it appears that the purported secondary offering by these persons may be a primary offering under Rule 415(a)(1)(x) of the Securities Act and that they are distributing the securities on the company’s behalf. As such, please revise to identify these persons as underwriters in the prospectus. In addition, since you are not eligible to rely on Rule 415(a)(1)(x) of Regulation C, the offering by the underwriters must be conducted at a fixed price for the duration of the offering. See Rule 415(a)(4). Please revise accordingly. Alternatively, provide a detailed analysis as to why this offering should not be considered an indirect primary offering registering shares by or on behalf of the registrant. Refer to Securities Act Rules Compliance and Disclosure Interpretation 612.09, available on our website.

noted in the Compliance and Disclosure Interpretation 612.09 reference by the Staff, determining whether an offering is a secondary one, as opposed to an offering on behalf of the issuer, is a factual analysis with various considerations. Such factual considerations, as highlighted in the Compliance and Disclosure Interpretation 612.09, are: (i) how long the selling shareholders have held the shares; (ii) the circumstances under which they received them; (iii) their relationship to the issuer; (iv) the amount of shares involved; (v) whether they are in the business of underwriting securities;

Rest of the answer

and (vi) whether under all circumstances it appears that they are acting as conduits for the issuer.

the specific factors referenced in CDI 612.09 are set forth in the tables provided below in response to the Staff’s specific comments, the Company would like to advise the Staff of the following:

● Since the commencement of the fund raising activities, the Company is currently unaware of any selling shareholder who has used a registration statement to sell our securities.

As such, there is no evidence that the Company has in the past utilized the registration process under Rule 415(a)(1) to indirectly offer its securities to the public.

● A majority of the securities issued to the selling shareholders were issued over six months ago, making most of the securities available for resale pursuant to Rule 144; provided that the warrants held by the selling shareholders are exercised on a cashless basis.

The Company is filing a registration statement to register the resale of the shares to fulfill a contractual obligation, even though it is unlikely that many of the shareholders will ever need to use the Company’s registration statement to sell their shares.

As CDI 612.09 gives consideration to the length of time the Company’s securities have been owned, the Company believes the foregoing demonstrates that a majority of the holders in the registration statement should not be viewed as “underwriters” under the Securities Act.

following chart provides relevant information about each selling shareholder, the securities they seek to resell and their relationship to the Company:

Selling

Shareholder

Date and Manner of Acquisition

Relationship with

Company

Consideration

Paid

In the Business of Underwriting

Alpha Capital Anstalt

-April 20, 2015 (“April Units”)

- October 3, 2014 - Private Purchase*

- $250k for 833,334 April Units, and

- $18.6k for 620,908 common shares

No

Andrew Zimmitti

- $10k for 33,334 April Units

Charles Arlen Kiser Jr

Former officer

- $2.5k for 8,334 April Units

Darwin Ret LLC

- $50k for 166,667 April Units

DLS Investments, LLC

- $250k for 833,334 April Units

GRQ Consultants Inc Roth 401k FBO Barry Honig

- $125k for 416,667 April Units

Kristopher D. Brown

- $5k for 16,667 April Units

Lincoln Park Capital Fund, LLC

- $105k for 350,000 April Units

Mike H. Ference

Richard Molinsky

- $25k for 83,334 April Units

R-Squared Partners, LLC

WillowDale Investments, LLC

- $1 m for 3,333,334 April Units

Zheng Zhi Zui

Carol Van Cleef

- April 20, 2015 (“Adv. Shares”)

Shareholder - Advisor

- $50k for 166,667 April Units, and

- $6k for 46,524 Adv. Shares

James G. Van Cleef

- $12.5k for 41,667 April Units

Patricia A. Kelly

Cynthia Jones

February 20, 2015

- $14.48k for equipment purchase

Sandor Capital Master Fund

- $36k for 1,200,000 common shares

Cavalary Fund I LP

- $10k for 300,000 common shares

Hudson Bay Master Fund Ltd

-January 19, 2015 (“Jan Units”)

- $100k for 1,000,000 Jan Units, and

- $200k for 666,667 April Units

Michal Handerhan

- February 6, 2015 Share Exchange

Officer / Director

- $5k for 50,000 Jan Units,

- $20k for 66,667 April Units, and

- ~$274 for 1,383,333 common shares

ATG Capital LLC

- $25k for 83,334 Jan Units, and

- $25k for 250,000 April Units

Charles W. Allen

- February 6, 2014 - Share Exchange

- $353 for 1,783,333 common shares

Deane A. Gilliam

- $250k for 2,500,000 Jan Units

Jane S. Vanderpoel

- $23k for 230,000 Jan Units

Peter P. Kelly

- $20k for 200,000 Jan Units

Timothy Andrew Sidie

- $5k for 50,000 Jan Units, and

- ~$198 for 1,000,000 common shares

Chord Advisors, LLC

- February 19, 2015 - Private Purchase*

- March 5, 2015 - Conversion of Payables

- April 22, 2015 - Conversion of Payables

- April 24, 2015 - Conversion of Payables

- May 4, 2015 - Conversion of Payables

Shareholder - Consultant

- $30 for 30,000 common shares

- $85,000 AP converted to 326,923 common shares

- $25,730 AP converted to 83,000 common shares

- $10,000 AP converted to 32,258 common shares

- $5,000 AP converted to 16,129 common shares

Sichenzia Ross Friedman Ference LLP

- February 18, 2015 - Private Purchase*

- February 18, 2015 - Conversion of Payables

- $615 for 123,077 common shares

- $40,000 AP converted to 153,846 common shares

Kyle Douglas Cline

- February 25, 2015 - Private Purchase*

- $660 for 550,000 common shares

RedChip Companies Inc.

June 16, 2015

-NA warrants issues for IR services

Alliance Funds LLC

- $135 for 27,010 common shares

- $18,694 AP converted to 71,900 common shares

*All shares issued in Private Purchases were originally issued by the company on February 6, 2014 as part of the Share Exchange

Read in the reply ↗

We note your disclosure in Note 4 to your financial statements that “[t]he Company redirected its focus from its e-commerce marketplace efforts to its transaction verification services business during the third quarter and fourth quarter in 2014.” Please review and revise your filing to ensure that this strategic decision and its resulting implications for your business are fully and clearly described throughout

Rest of the question

your filing, including, but not limited to the summary and business discussions as well as MD&A.

Our summary and business discussions, as well as our MD&A section, was updated in the Amendment to reflect the change in focus.

We note, to provide clarity, that we have not abandoned our e-commerce marketplace but have concentrated our focus on our transaction verification related businesses and investments in order to take advantage of our belief in the higher growth prospects in this business segment. Read in the reply ↗

With respect to every third-party statement in your prospectus, such as the statistics provided by Bitcoin Foundation and Blockchain.info, please provide us with the relevant portions of the industry research reports you cite.

Rest of the question

To expedite our review, please clearly mark each source to highlight the applicable portion or section containing the statistic, and cross-reference it to the appropriate location in your prospectus. Lastly, please tell us whether any of the reports were prepared for you.

We have provided relevant citations where such statistical information remains. However, many such references were removed from the

Registration Statement. Read in the reply ↗

Please supplementally provide us with copies of any graphical materials or artwork you intend to use in your prospectus. Upon review of such materials, we may have further comments. For guidance, refer to our Securities Act Forms Compliance and Disclosure Interpretation 101.02.

have supplementally (as correspondence on EDGAR simultaneously herewith) provided such graphical materials. However, many of such graphical material were removed from the Registration Statement. Furthermore, to the extent we include any additional graphical materials or artwork in subsequent version of the prospectus, we will supplementally provide those to the Staff. Read in the reply ↗

We note reference to price adjustment and anti-dilution features in your descriptions of recent warrant grants. To the extent that the common shares being registered underlie warrants that have adjustment features where the exercise price adjusts if the company sells shares at a price lower than the warrant exercise price, please confirm to us your understanding that additional issuances pursuant to such warrant

Rest of the question

agreements would not be covered by Rule 416(a) and will require a separate registration statement and fee.

confirm our understanding that additional issuances would not be covered and will require a separate registration statement and fee. Read in the reply ↗

Please revise to disclose that this offering constitutes you initial public offering and clarify that you are registering the sale of common stock issued to the selling security holders as well as common stock underlying outstanding warrants exercisable at varying prices. In addition, to comply with Rule 421(d), please eliminate the multiple parenthetical phrases from the cover page.

Rest of the question

Refer to Item 502 of Regulation S-K.

For the reasons provided in our response to Comment #2 above, we do not believe that this resale offering constitutes our initial public offering. We have, however, removed the parenthetical phrases on the cover page.

Prospectus

Summary

Our Business, Read in the reply ↗

Please expand your disclosure here or elsewhere in the summary to briefly discuss your history of net losses for the periods presented.

expanded our disclosure to discuss our history of net losses in the Amendment. Read in the reply ↗

You prominently present data on the technical capacity of your facilities, and state that your new facility is anticipated to handle over 10 megawatts (mw) of power and can potentially house up to 40,000 TH/s of mining servers. Yet you do not provide context for this information that would allow investors to compare this data with that of your competitors or with any industry standard.

Rest of the question

Please revise to provide context to this disclosure or relocate such disclosure to portions of your document where you discuss the technical requirements of your business.

condensed our disclosure to provide context on the current capabilities of the facilities. Read in the reply ↗

You state that your marketplace offers 250,000 “curated” products. Please clarify here and in Business the process by which you curate your product list and whether this entails each product being evaluated by your staff.

clarified this disclosure in the Amendment. Read in the reply ↗

Please tell us what consideration you gave to expanding your disclosure here and in your business section to describe with specificity your fee structure for affiliates and nonaffiliates.

No numbered answer found in the reply. Read the reply ↗

You state that you currently operate a beta e-commerce marketplace. Please revise to describe with more detail the operational status of your marketplace. Ensure that you include similar disclosures in your business section.

clarified the operations and status of the beta e-commerce marketplace throughout the Amendment. Read in the reply ↗

You state that in 2015 you issued common stock to Sichenzia Ross Friedman Ference LLP, pursuant to certain conversion agreements for settling outstanding legal fee balances. You also indicate that Sichenzia Ross Friedman Ference will be opining on the validity of the securities being offered in this transaction.

Rest of the question

Accordingly, please tell us why you believe such interest is not required to be disclosure pursuant to Item 509 of Regulation S-K.

added disclosures to our “Experts” and “Legal Matters” sections of the Amendment. Read in the reply ↗

Please explain your basis for assuming that the 22,116,684 of shares issuable upon exercise of warrants will be outstanding following this offering.

Since we continue to believe that this is a resale offering, if the 22,116,684 shares of common stock issuable upon exercise of the selling shareholders’ warrants are to be sold pursuant to the prospectus and the Registration Statement, our issued and outstanding shares will be increased. At this time none of these such warrants have been exercised. Read in the reply ↗

Expand your risk factor disclosures to include a separately captioned risk factor discussing your history of net losses, or tell us why you believe that such a risk factor is not required.

added a risk factor disclosing and discussing the risks related to our history of net losses. Read in the reply ↗

We note your disclosure on page 61 that as with other currencies, bitcoins can be used to purchase illegal goods or fund illicit activities. We also note your reference on the same page to Silk Road. Tell us whether you considered expanding your disclosure in this section to address risks pertaining to whether your ecommerce site could be utilized to facilitate illegal purchases or transactions.

Rest of the question

Also disclose in your business section whether you have adopted any policies or controls with respect to the products sold by thirdparties on your marketplace.

expanded our disclosure in this section to address risks pertaining to the utilization of our e-commerce site to facilitate illegal transactions. We further included a discussion about our controls to protect against such risks. Read in the reply ↗

Please add a separately captioned risk factor disclosing the minimum number of months that you will be able to conduct your planned operations using currently available capital resources. In addition, disclose the minimum additional dollar amount you will require to fund your business activities for the next 12 months.

added a risk factor disclosing and discussing our capital resources and the amount of time such resources will sustain operations.

Furthermore, we disclosed the dollar amount we anticipated needing to fund our activities for the next 12 months. Read in the reply ↗

We note disclosures in Mr. Allen’s professional biography on page 67, indicating that Mr. Allen currently serves as an officer for other entities, such as Allen Consulting, LLC. Please add a risk factor that discusses the possible conflicts of interests involving your CEO and whether you have a policy in place to resolve such conflicts.

added a risk factor disclosing and discussing the risks related to any conflicts our CEO has with performance of duties to Allen

Consulting, LLC and the Company. Read in the reply ↗

You state that if you are unable to comply with the Sarbanes-Oxley Act’s internal control requirements, you may not be able to obtain the independent auditor certifications that Sarbanes-Oxley Act requires publicly-traded companies to obtain.

Rest of the question

However, as a smaller reporting company you will not be required to obtain an auditor attestation with respect to management’s conclusion about the effectiveness of internal controls over financial reporting, for so long as you remain a smaller reporting company. Please revise your disclosure accordingly or advise.

expanded our disclosure to address our status as a smaller reporting company and the requirement for auditor attestation. Read in the reply ↗

You state that during your assessment of the effectiveness of internal control over financial reporting as of March 31, 2015, management identified a significant deficiency “related to presence of weakness in our disclosure control and procedure resulting from limited internal audit functions.” Please revise the caption of this risk factor to state clearly that you identified a deficiency in your internal control

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over financial reporting. In addition, in an appropriate location, include a more detailed discussion of the remedial steps you intend to take to address the weakness and of the material costs, if any.

revised the caption of the risk factor and added a discussion of the presence of weakness and remedial steps we intend to take.

Management’s

Discussion and Analysis of Financial Condition and Results of Operations

Overview, Read in the reply ↗

The disclosure in your overview is repetitive of the disclosure in your summary and business sections. Please consider revising your disclosure in this section to address instead how you earn revenues and income and generate cash, to identify the key opportunities, challenges and risks you face as well as to discuss any known material trends and uncertainties and their impact on your business.

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See Item 303(a) of Regulation S-K, and for guidance, refer to Section III.A of Release No. 33-8350.

expanded our disclosure in the overview section to address how we earn revenues or anticipate to earn revenues and to identify opportunities, challenges and risks we face. Read in the reply ↗

We note your disclosure on page 43, where you state that “over time it is anticipated that the rewarded value of adding a block to the Blockchain will decrease, and we expect to charge transaction fees to verify transactions.” Tell us what consideration you gave to discussing in your overview the challenges resulting from this anticipated trend.

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Results of Operations for the Year Ended December 31, 2014 and for the Period from July 28,

enhanced the disclosure to discuss these challenges and the alternative source of revenues we anticipate instead.

Results of Operations for the Year Ended December 31, 2014 and for the Period from July 28, 2013 (Inception) Through December 31, 2013, Read in the reply ↗

We note that for the year ended December 31, 2014, the company earned $20,405 in processing fees from e-commerce transactions from your BTCS marketplace website. Please clarify the currency in which these transactions were processed (e.g., U.S. dollar, bitcoin, dogecoin).

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In addition, considering the company’s refocus from its e-commerce marketplace business to its transaction verification services business, as noted on page F7, tell us whether you expect to continue to earn revenues from the e-commerce transactions verification services business in the future.

enhanced the disclosures in this section to specify the currency in which revenues are generated and the currency in which our revenues are presented in our financial statements. Read in the reply ↗

Please explain further how you generate revenues from your transaction services business. In your response, tell us the number of transactions processed and the average fee per transaction during fiscal 2014 and the interim period to date in fiscal 2015.

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Also, clarify whether the amounts recorded in revenue during these periods represent fees earned by the company for the successful mining of bitcoin on a customer’s behalf, or whether these amounts represent successful bitcoin mining performed by the company on its own behalf.

connection with our response to Comment #21, we’ve enhanced our disclosure to address the requested information and discussions.

However, we do not monitor the number of transactions processed nor do we monitor the fees earned per transaction. Instead, as explained in the Amendment, our current source of revenues is the bitcoins that we earn from the processing power of our servers. Read in the reply ↗

Please revise to disclose the monthly lease payments due on the 83,000 square foot facility in North Carolina. Also, revise to more fully describe, and quantify, the leasehold improvements and capital expenditures that will be required in order to fully implement your transaction verification service business plan.

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In addition, disclose the monthly electricity costs that you expect to incur once you are fully operational.

enhanced our disclosure to address the requested information and discussions. However we do not know the monthly eclectic cost once fully operational as it will depend on the amount of electricity used which is a function of products we have not yet purchased.

Therefore any discussion would be speculation and is not addressed.

Business, Read in the reply ↗

This section contains lengthy descriptions of the market of bitcoins relative to the portions of your discussion describing your business. Your business discussion should be specifically tailored to your business focus and should describe your industry insofar as it is relevant to an understanding of your business plan.

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Please revise to refocus the presentation in this section on your current business and opportunity.

revised our disclosures to tailor our industry discussion to those industry descriptions connected to and relevant to our business focuses. Read in the reply ↗

You provide information on the growth of the Bitcoin Network’s total hashrate on page 52, and the historical price of bitcoins on page 57. Revise the narrative presentations accompanying the graphs in this section to clarify how the information in the graphs relates to your business opportunity.

referenced chart was removed from the Amendment. Read in the reply ↗

You provide information on regulatory responses to the emergence of bitcoins, however, much of the information presented is from 2014. To the extent that more recent information is available regarding how the referenced financial regulatory agencies intend to regulate bitcoins and bitcoin-related companies, ensure that you update this section to incorporate this information.

referenced information was updated or removed in the Amendment. Read in the reply ↗

Please explain to us how you determined that you had only two named executive officers for fiscal 2014. In this regard, we note that Mr. Sidie is described as your Chief Technology Officer on page 71. Refer to Item 402(m)(2)(ii) of Regulation S-K.

Compensation disclosures for Mr. Sidie were provided in the executive compensation section of the Amendment. Read in the reply ↗

Please revise your disclosure in this section to present together all of the information relating to a single transaction rather than presenting the information in chronological order. For instance, It appears that you discuss payments on the January 19, 2015 Handerhan Note in three separate paragraphs. In addition, where a loan has been paid in full, please include language clarifying this.

revised the disclosures in order to group together the presentation by transaction, as opposed to chronology. Read in the reply ↗

Please disclose how you determined the dollar value of the mining hardware Mr. Allen sold to you in exchange for payment. Refer to Item 404(a)(6) of Regulation S-K.

enhanced the discussion by including the basis on which our Board of Directors determined the value of the equipment purchased. Read in the reply ↗

We note that you have not disclosed the financial terms of the transactions with Kamron Inc. and ASB Trading that occurred in 2013. Please revise your disclosure to provide this information. Refer to Instruction 2 to Item 404(d) of Regulation S-K.

enhanced our disclosure to include the requested information. Read in the reply ↗

Footnote 32 states that “[e]ach of Hudson Bay Master Fund Ltd. and Sander Gerber disclaims beneficial ownership over these securities.” Beneficial ownership disclosure in this table is based on voting and/or investment power. See Instruction 2 to Item 403 of Regulation S-K and Exchange Act Rule 13d-3.

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To the extent that you retain these disclaimers, please provide us with a legal analysis supporting your belief that beneficial ownership disclaimers are proper outside of filings on Schedules 13D and 13G.

amended the footnote to remove such disclaimer language. Read in the reply ↗

Please revise your disclosure to state the facts relied upon to make the claimed exemption available for each transaction, and disclose the total number of unaccredited investors who participated in each transaction. Refer to Item 701 of Regulation S-K.

amended the section to include a reference to the exemption claimed for each transaction.

Exhibits, Read in the reply ↗

We note that you have incorporated by reference certain promissory notes that have not been executed. For example, exhibit numbers 10.23, 10.45, and 10.49 do not appear to have been executed and are filed as “form of” agreements. Please file executed copies of these agreements with your next amendment.

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Additionally, to the extent you are relying on Instruction 2 to Item 601 of Regulation S-K in filing “form of” exhibits for these or other documents, ensure that you provide a schedule containing the information required by that instruction.

filed the executed instruments as replacement exhibits with the Amendment.

****

Company hereby acknowledges the following:

● should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing;

● the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and company may not assert staff

Rest of the answer

comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Read in the reply ↗

We note your response to prior comment 3 and revised disclosure regarding your shift in focus towards your transaction verification service, though you continue to support and develop your ecommerce marketplace. Please revise your disclosure throughout to more specifically explain, and quantify to the extent possible, the nature of this strategic shift and describe in more detail the extent of the ongoing support

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and development of your Ecommerce Marketplace. Also, tell us what consideration you gave to including a separately captioned risk factor under “Risks Related to Our Ecommerce Business” alerting investors to any material risks resulting from this shift in focus.

Company will still be involved in both the transaction verification service as well as the ecommerce marketplace. We have revised the disclosure in the filing to further describe our business. We do not believe that expanding our business to include transaction verification services requires any additional risk factors related to our ecommerce business. Read in the reply ↗

We reissue prior comment 7 in part. Please revise your disclosure to clarify that you are registering the sale of common stock issued to the selling security holders as well as common stock underlying outstanding warrants exercisable at varying prices.

No numbered answer found in the reply. Read the reply ↗

Revise your summary to disclose that your independent auditors have indicated in their report on your December 31, 2014 financial statements that there is substantial doubt about your ability to continue as a going concern.

Company disclosed that its independent auditors have indicated in their report on the December 31, 2014 financial statements that there is substantial doubt about the Company’s ability to continue as a going concern. Read in the reply ↗

We note your response to our prior comment 14. Tell us whether the warrant holders have agreed to exercise their warrants in connection with the offering and if so please revise the filing to indicate as such. If not, please remove the effect of the 22,116,684 shares issuable upon exercise of warrants from the amount of common stock outstanding following this offering and revise footnotes (1) and (2) accordingly.

No numbered answer found in the reply. Read the reply ↗

We note your discussion on page 11 regarding your historical cash burn rate for the six months ended June 30, 2015. Please revise your liquidity disclosures to include a discussion of the minimum number of months that you will be able to conduct your planned operations using currently available capital resources. Please refer to FRC 501.03(a) and Section IV of SEC Interpretive Release 33-8350.

No numbered answer found in the reply. Read the reply ↗

We note your response to prior comment 28, where you state that the referenced information was updated or removed in this amendment. We are unable to locate, however, any updates to your disclosures reflecting regulatory developments since 2014. It appears that your filing should reflect recent developments pertaining to the regulation of bitcoins by the U.S.

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Commodity Futures Trading Commission as well as any other material regulatory developments. Additionally, we note that you have deleted disclosure pertaining to the regulation of bitcoins in foreign jurisdictions. Please advise why you believe that such information is not material to an understanding of your business or further revise to include this information. Refer to Item 101(h)(4)(i)( ix) of Regulation S-K.

Additionally, the Company has included disclosure pertaining to the regulation of bitcoins in foreign jurisdictions. Read in the reply ↗

We note your revised disclosure in response to prior comment 32, where you quantify the amounts of the transactions with your former management. Specifically, you state that the transaction with Kamron Inc. was valued at $61,413 and ASB Trading at $35,286.

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However, this information does not appear to reconcile to the information included in the Asset Purchase and Debt Assumption Agreement filed as exhibit 10.10 to your Form 8-K filed on February 6, 2015, and incorporated by reference into this filing, where the related party liabilities were payable in the amount of $28,585.79 to Andi Brabin and $55,913.40 to Ronnie Murphy as of February 5, 2014. Please advise.

disclosure has been updated to reflect the amounts as set forth in the Asset Purchase and Debt Assumption Agreement filed as exhibit

10.10 to our Form 8-K filed on February 6, 2014. Read in the reply ↗

We reissue prior comment 34, insofar as you have not revised your disclosure to state the facts relied upon to make the claimed exemptions available for each transaction. We specifically note that in some instances you have not provided the date of sale nor provided the total number of unaccredited investors, where you rely on Rule 506, who participated in each transaction. Refer to Item 701 of Regulation S-K.

All of the listed offerings and sales were deemed to be exempt under Section 4(a)(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of accredited investors, and transfer was restricted by us in accordance with the requirements of the Securities Act of 1933.

No offers were made to unaccredited investors. We have provided the dates, or ranges of dates of sale or conversion, as applicable. Read in the reply ↗

We note your revisions in response to prior comment 6, where you refer to the CFTC Order that found that bitcoins are properly defined as commodities. Please expand your disclosure to explain with more specificity the impact on your business resulting from this regulatory development. Additionally, ensure that you update your risk factor disclosure on page 25 to reflect these developments.

We do not believe the CFTC Order will be applicable to our business. As a result, the CFTC Order will have no impact on our business.

We have updated our risk factor disclosure to reflect these recent developments. Read in the reply ↗

We note your amended disclosure under the caption Recent Sales of Unregistered Securities, stating that you issued 40,000 shares of common stock to RK Equity Advisors, LLC on October 29, 2015. You also indicate that Mr. Allen founded RK Equity Capital Markets LLC and RK Equity Investment Corp. It appears, based on this relationship, that discussion of this transaction is warranted.

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Refer to Instruction 1 to Item 404(a) and Item 404(d) of Regulation S-K and advise.

Our filings have indicated that Mr. Allen was a Managing Director at RK Equity Capital Markets LLC (“RK”) and focused on natural resources investment banking and added to RK’s capital markets efforts. In August, 2012 Mr. Allen co-founded

RK Equity Investment Corp. (“RKEIC”). Our filings do not indicate that Mr. Allen was the founder of RK Equity Capital

Markets LLC. The Company, however, issued 40,000 shares of common stock to RK Equity Advisors,

LLC. While RK Equity Advisors LLC has a similar name to RK Equity Capital Markets LLC and RK Equity Investment Corp.

Rest of the answer

they are completely separate legal entities. Mr. Allen is not and has never been an officer, director, member, shareholder or employee of RK Equity Advisors LLC and no related party disclosures are required.

Read in the reply ↗

Note 12 to your financial statements indicates that on October 14, 2015, you issued shares of your common stock to an individual investor; however, it does not appear that you have provided updated disclosure in this section. Please revise or advise.

have revised the disclosure in this section. Read in the reply ↗

We note your response to prior comment 1 and your corresponding amendments in the filing. Please provide us with an analysis supporting your view that the findings in the CFTC Order are not applicable to your business.

Staff seeks our analysis supporting our view that the findings in the CFTC Order are not applicable to our business. Our business can be best described as the ownership and operation computer hardware and software for the mining and generation of bitcoins via blockchain algorithms. Once we own bitcoins obtained through our efforts and assets, we can sell the bitcoins as principal to third parties for cash.

CFTC Order issued September 17, 2105 (See Release PR7231-15) (the “Order”) represents the first action against an unregistered bitcoin options trading platform.

Rest of the answer

As noted in the Order, Coinflip, Inc./Derivabit conducted activity related to commodity options transactions without complying with the Commodity Exchange Act and CFTC Regulations, specifically “operating a facility for the trading or processing of commodity options without complying with the CEA or CRTC Regulations otherwise applicable to swaps or conducting the activity pursuant to the CFTC’s exemption for trade options.” The Order further notes Coinflip operated an online facility named Derivabit, offering to connect buyers and sellers of Bitcoin option contracts, and the charges involved conducting activity related to commodity options transactions. The Company neither operates an online facility offering to connect buyers and sellers of Bitcoin, or Bitcoin option contracts, and thus our analysis concludes that the findings are not applicable to the Company’s business.

Order also for the first time noted the CFTC has reached the conclusion that Bitcoin and other virtual currencies are properly defined as commodities and therefore subjected the online facility and options contracts to CFTC jurisdictional reach. Our amendments to the filing, and statements throughout the filing, describe the Bitcoin asset as constituting a commodity, which in the future could be subjected to regulation and which faces risks associated with commodities, in general. Accordingly, the Staff’s statement that we have determined through our analysis that we are not subject to the CFTC Order misstates our position inasmuch as we believe and the filings acknowledge Bitcoin is viewed by regulators as a currency, but that the CFTC Order as it relates to an online platform and options trading is inapplicable to our business.

Read in the reply ↗

We note your response to prior comment 3. However, it appears from your recent developments discussion that you have not updated this section to include the issuance of 80,000 shares of your common stock to RK Equity Advisors LLC. Please revise accordingly and review your document to ensure that it is updated to reflect any other interim developments.

We will revise the disclosure in this section to add the issuance of 80,000 shares to RK Equity Advisors in the Recent Sales of Unregistered

Securities section.

Signatures, Read in the reply ↗

It appears that the signature page does not conform to the requirements of Form S-1. In your next amendment, ensure that you provide the dates on which the registration statement was signed by the company and board members.

dates on the signature page will be provided in the next filed amendment. Read in the reply ↗

You indicate that your management has not performed its assessment of internal control over financial reporting as of December 31, 2010 due to “a transition period established by rules of the Securities and Exchange Commission for newly public companies.” However, pursuant to Item 308T of Regulation S-K, beginning in fiscal periods ending on or after December 15, 2007, companies must file management’s assessment of

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internal control over financial reporting if they previously filed an annual report with the Commission for the prior fiscal year. If your management has not yet performed its assessment, we ask that you complete your evaluation and amend your filing within 30 calendar days to provide the required management's report on internal control over financial reporting since you have been public beginning on June 10, 2008 and filed an annual report for fiscal 2009. In performing your evaluation, you may find the following documents helpful: ƒ the Commission’s release Amendments to Rules Regarding Management’s Report on Internal Control Over Financial Reporting (Securities Act Release 8809/Financial Reporting Release 76). You can find this release at: http://www.sec.gov/rules/final/2007/33-8809.pdf; ƒ the Commission’s release Commission Guidance Regarding Management’s Report on Internal Control Over Financial Reporting Under Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (Securities Act Release 8010/Financial Reporting Release 77). You can find this release at http://sec.gov/rules/interp/2007/338810.pdf; and ƒ the “Sarbanes-Oxley Section 404 – A Guide for Small Business” brochure at: (http://www.sec.gov/info/smallbus/404guide.shtml). Please note that the failure to perform management’s assessment adversely affects the Company’s and its shareholders ability to avail themselves of rules and forms that are predicated on the current or timely filing of Exchange Act reports. For further information regarding these impacts, please see Compliance and Disclosure Interpretation 115.02, which you can find at http://www.sec.gov/divisions/corpfin/guidance/regskinterp.htm.

No reply letter found.

In addition, please consider whether management’s failure to perform or complete its report on internal control over financial reporting impacts its conclusions regarding the effectiveness of your disclosure controls and procedures as of the end of the fiscal year covered by the report and revise your disclosure as appropriate.

No reply letter found.

Please revise to file auditors’ reports that reference the two year period ended December 31, 2010, as the current reference does not indicate that the financial statements for both fiscal 2010 and 2009 were audited.

No reply letter found.

Additionally, please confirm whether or not the audit was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and revise the auditors’ reports to indicate as such pursuant to PCAOB Auditing Standard No. 1. The reference to conducting the audit in accordance with “International Standards” should be removed.

No reply letter found.

We note your proposed disclosures in prior comment 1 to provide management’s report on internal controls over financial reporting (“ICFR”). Your proposed disclosures for changes in ICFR should mirror the requirements of Item 308(c).

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In this regard, you should disclose whether or not there were any changes in ICFR during the fourth quarter ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, your ICFR. Please provide us with your proposed, revised disclosures in response to this comment with marked changes.

No reply letter found.

Your response prior comment 2 references your response to prior comment 1. However, your response to prior comment 1 does not indicate why you believe your failure to perform or complete your report on ICFR would not impact your conclusion on the effectiveness of your disclosure controls and procedures as of December 31, 2010.

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In this regard, please note that, as discussed in Question 115.02 of our Compliance and Disclosure Interpretation for Regulation S-K located at http://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm, the failure to file management's report on Internal Control over Financial Reporting rendered your annual report materially deficient and also rendered the Company not timely or current in its 1934 Exchange Act Reporting. In light of these facts, we do not believe you could conclude that your disclosure controls and procedures were effective as of the end of the fiscal year. Please revise management's conclusion on the effectiveness of your disclosure controls and procedures to be that they were ineffective or tell us why you believe such revision is not considered necessary.

No reply letter found.

We acknowledge that you completed management’s report on ICFR and concluded such controls to be effective. However, as indicated in prior comment 2, the failure to file management's report on ICFR rendered your annual report materially deficient and also rendered the Company not timely or current in its 1934 Exchange Act Reporting.

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In light of these facts, we do not believe you could conclude that your disclosure controls and procedures were effective as of the end of the fiscal year. Accordingly, we reissue our comment to either revise management's conclusion on the effectiveness of your disclosure controls and procedures to be that they were ineffective or tell us why you believe such revision is not considered necessary.

We are writing to request a two (2) business day extension to respond to comments received from the Staff of the Securities and Exchange Commission (the “Staff”), by letter dated July 5, 2011 (the “Comment Letter”), with respect to TouchIT Technologies, Inc.’s (the “Company”) Form 10-K for the fiscal year ended December 31, 2010. We have been diligently preparing a response but are unable to meet the ten (10) business day deadline of July 19, 2011.

Rest of the answer

We anticipate finalizing the response no later than July 21, 2011 and thus the Company respectfully requests an extension through July 21, 2011 to respond to the Comment Letter.

Read in the reply ↗

We note that the audit opinions indicate that the financial statements give a “true and fair view” of the financial position of the company. Please confirm if the reference to a “true and fair view” has the same meaning as “presents fairly” and revise the opinions to replace this language so that the opinion paragraph follows the wording requirements of PCAOB Standards.

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Please refer to Section III.D of our November 1, 2004 International Reporting and Disclosure Issues, which can be located at http://www.sec.gov/divisions/corpfin/internatl/cfirdissues1104.htm.

No reply letter found.