INX Limited, an encryption exchange startup, plans to raise up to $ 129.5 million through an IPO, in the first sale of security tokens registered with the United States Securities and Exchange Commission (SEC).
No, that is not a typo for “ICO”, the initial offers of currencies that tested the limits of the securities law during the go-go days of 2017. IPO means IPO here: INX, based in Gibraltar, submitted A draft of F-1 (the SEC prospectus form for foreign issuers) with the agency on Monday and will market the tokens to retail and institutional investors through the initial public offering.
As such, it is an important milestone since date, token sales have not been recorded. Some issuers limited their marketing to wealthy investors to be exempt from the registration requirement and submit notifications to the SEC. Most did not even bother to tell regulators what they were doing, and over the past year, the agency has filed a series of cases against ICO teams for illegally selling unregistered securities.
In addition, the sale of INX would also be one of the few complete IPOs in the blockchain industry and almost certainly the largest. Last year, the mining subscription company Argo Mining raised $ 32.5 million through an IPO at the London Stock Exchange.
The target user base of INX is mostly institutional investors, although, like the INX token itself, the cryptocurrency trade in the exchange will be available to the general public, provided they go through an investigation against money laundering. Money and the knowledge of its customers.
“When fully operational, we hope to offer professional operators and institutional investors negotiation platforms with established common practices in other regulated financial services markets, such as the usual negotiation, clearing and settlement procedures, regulatory compliance, capital reserves and liquidity and operational transparency “. says the draft of the prospectus.
In this way, INX will compete with a series of institutionally focused regulated trading platforms that will be launched this year, although INX stands out in the breadth of digital assets it plans to list.
“Our vision is to establish two trading platforms and a security token that provide regulatory clarity to the blockchain asset industry. We plan to achieve this [in part] by differentiating between security and non-security blockchain asset classes and providing business opportunities for each class, “says the prospectus, and then adds:
“In the future, we intend to establish a platform for trading derivatives such as futures, options and swaps.”
This means that the exchange will be in the same space as not only the tZERO (security tokens) of Overstock, but also the digital assets Coinbase Prime and Fidelity (spot cryptocurrencies) and, finally, the Bakkt (derivatives) of Intercontinental Exchange.
Although it is a security, the INX token could also be described as a utility token, as holders will have the option of using it in INX Exchange to pay transaction fees.
This is perhaps ironic since, during the ICO boom, many issuers argued that their tokens were not securities because they had a utility, such as the right to use a platform developed with the proceeds of the sale.
At the same time, symbolic investors will obtain a share of INX earnings, although they will not hold shares.
On the contrary, they will remain in line in front of the shareholders to receive a refund, in case of liquidation. In this way, the token is similar to the preferred stock.
“It is the intention of the Company that the claim of the holders of Token INX for breach of contract exceeds the rights of the owners of the ordinary shares of the Company in liquidation,” says the document.
The values will be represented as ERC-20 tokens in the ethereum blockchain.
Since cryptoactives are such a new and unprecedented phenomenon that is not easily assigned to old categories, several different regulatory agencies have claimed jurisdiction over different parts of the industry.
For INX, this has meant obtaining approval from several agencies. Before you can proceed with the sale of tokens, INX has yet to ask the SEC to consider its “effective” prospectus.
The prospectus includes disclosures that are standard for publicly traded companies, but rare, if not unknown, in the dark world of cryptography, such as executive employment contracts.
That is only for fundraising. For the exchange to really open for trade, other approvals must still be obtained.
Since INX will list security tokens, it will first have to become a stockbroker, which requires a separate registration with the SEC and acceptance into FINRA, a self-regulatory organization (SRO) and an alternative trading system (ATS) , which requires submitting additional forms to the SEC.
In addition to the securities-related approvals, to operate as an encryption exchange where investors can buy and sell bitcoins and the like, INX will need money transmitter licenses from the individual states where it operates.
Wall Street image via Shutterstock
Article Source: http://www.coindesk.com