- A group of scientists and engineers are developing a new cryptocurrency that will pay people for their DNA test results.
- Luna Coin is aiming to raise money through a token sale in the first quarter of 2018.
- The company claims the Luna Coin will be a "utility token."
Millions of people are testing their DNA with kits that tell them their family history and let them examine certain health risks, all by spitting in a tube at home.
Each of those samples contains data that could be tremendously valuable to scientific researchers looking to understand diseases and discover new treatments. But many consumers are opting out of sharing their health information with the research community.
A group of scientists and engineers think they've found the trick to get people to opt-in: cryptocurrency.
Starting in the first quarter of 2018, users of DNA tests will be able to share their information in exchange for a virtual currency called Luna Coin. The idea is that contributors of personal data should be financially rewarded, especially if what they provide is being used to help pharmaceutical companies find and develop new drug targets.
"We view that as an asset and want everybody to realize the value of that asset," said Michael Witz, a Luna Coin co-founder and the project's cryptocurrency expert.
That's a dramatic shift away from models spearheaded by companies like 23andMe, which offer users the opportunity to share their DNA for research but do not pay them for it. Instead, 23andMe makes money by selling access to that data to pharmaceutical makers like Genentech.
To flip the model, Luna Coin is playing into the emerging craze around cryptocurrencies. Following the surging popularity of bitcoin, hundreds of digital currencies have been created for all sorts of niche economies, from gaming and digital entertainment to buying and selling legal cannabis.
They all use blockchain technology, a way to securely and transparently track transactions without relying on a fiat currency.
Luna Coin is a product of Luna DNA. The company's CEO and CIO are both veterans of genetic research firm Illumina: CEO Bob Kain was Illumina's chief engineering officer, and CIO Scott Kahn comes from the CIO role at Illumina. The rest of the team includes crypto developers, people from the health and gaming worlds and life sciences investor David Lewis.
There are plenty of potential stumbling blocks on the way to making Luna Coin a success. For one, the project is planning a token sale in the first quarter of next year and will have to contend with an unclear set of regulations.
Witz didn't say how much Luna Coin plans on raising by selling tokens, but he said that comparable offerings have brought in $40 million to $50 million.
The U.S. Securities and Exchange Commission has started looking into so-called initial coin offerings, or ICOs, a type of fundraising that's attracted more than $3.6 billion in capital this year, according to Autonomous Next. ICOs were virtually unheard of before 2017.
Witz said that the Luna Coin will be a utility coin, meaning that it's designed for a specific purpose and not as an investment or security.
However, SEC Chairman Jay Clayton wrote in a public statement last week about ICOs and cryptocurrencies that when it comes to utility tokens, "many of these assertions appear to elevate form over substance." In other words, the SEC will be looking for characteristics of securities in future offerings.
"Merely calling a token a 'utility' token or structuring it to provide some utility does not prevent the token from being a security," Clayton wrote.
Luna DNA isn't the first project in the market to encourage data sharing by offering financial rewards to consumers. The so-called "biorights" movement has emerged in the past few years to offer cash payments to consumers in exchange for their DNA.
But crypto is a new twist.
Another challenge for Luna and other companies that are building health databases is a lack of diversity. Researchers are hungry for genetic information from people of African and Latin American descent as well as those with native or indigenous ancestry. In total, those groups represent only about 4 percent of all genomic samples, according to an analysis in "Nature."