INX Limited Crypto Exchange Looks To Secure $130 Million Through An IPO Via SEC-Registered STO
The United States is a regulatory nightmare for crypto exchanges and businesses. The country’s regulatory bodies have put in place a variety of rules regarding crypto trading and exchanges find it challenging to comply with these regulations.
One of the practices which regulators found problematic is initial coin offerings (ICOs), and crypto exchanges have struggled to find a way around it. INX Limited seems to have found a way to offer its tokens without being on the wrong side of American regulatory policies.
The cryptocurrency exchange startup is planning an initial public offering (IPO), the first of its kind in the US. The intended token sale will be registered with the US Securities and Exchange Commission (SEC), and INX is planning to raise about $130 million in the token sale. With a crypto start studded background of early investors such as Jameson Lopp, Samson Mow, and Mark Yusko. That's not all though, Alan Silbert (Brother is Barry, head of Digital Currency Group), David Weild (former Nasdaq Vice Chairman), and Thomas Lewis.
An IPO circumvents many challenges that arose from ICOs. When token sales are unregistered, they are considered illegal sales of unregistered securities and many crypto related businesses have gotten into trouble with regulators because of this. In some cases, issuers end up having to privately dispense their tokens to a few wealthy buyers to avoid breaching regulations.
INX has avoided all these problems by creating a public offering for its tokens. The exchange’s IPO will be the biggest ever in the blockchain industry. It will also be one of the very few IPOs that have been done in the industry.
For starters, INX aims to mainly cater to the needs of institutional investors, although they will also be offering crypto trading for general traders. INX’s native token will be available for trading on their platform.
According to the startup’s draft prospectus, they intend to add several other kinds of financial practices to their business in the future. The firm plans on having a security token and two trading platforms. The idea is to differentiate between security and non-security assets and have these two classes being traded on their respective exchanges.
INC also has plans to offer options, swaps, and futures, and this would put them in competition with some of the largest exchanges in the US. Some of the startup’s competitors would be Coinbase Prime, tZero, Bakkt, and Fidelity Digital Assets.
The token being offered by INX can double as a security and a utility token. Traders who have this token will be able to use it on the exchange to pay the necessary transaction fees. Investors in the token will also receive INX profits even though they won't be equity holders in the company.
More Regulatory Clearance Still Needed
While the SEC may have granted permission for INX’s IPO, that is not the end of the line as far as regulatory clearance goes. Before the startup’s exchange can be fully operational, many other regulators will need to be consulted because their approval is necessary.
The exchange will need to be registered with regulators in each of the states which INX plans on operating in. The firm also needs a few other separate SEC approvals for brokering deals, running an alternative trading system and other matters. While the startup still has a long way to go, a registered token offering gives them a good start as far as regulatory approvals go.