$130 Million Goal for INX Limited IPO
The first security token being sold through the United States Securities and Exchange Mission is underway. Crypto exchange startup INX Limited plans on raising $129.5 Million through their first IPO. The exchange, which originated from Gibraltar, filed an F-1 Application with SEC on Monday, August 19th. This application was reviewed 24 hours later and marked a significant milestone for the company. Until today, token sales have been unrecognized by US financial regulators. Most exchanges wouldn’t even inform their respective regulating authorities about their IPO’s or ICO’s.
INX Limited is one of the first crypto exchanges to sign up for a fully-registered IPO for the blockchain industries. Last year, Argo Mining was the first to accomplish this task. They earned $32.5 Million from their IPO at the London Stock Exchange. INX Limited hopes to make almost $100 Million more on the US Stock Exchange.
The targeted userbase for INC is particularly institutional investors. However, just like with the INC Token, the IPO will also be available for the general public. It’ll be required that the general public maintain screening and anti-money laundering protocols to defend themselves from any potential issues. Secretly, this will deter multiple citizens in the general public from the IPO and make it more and an institutionally-focused product. A crypto exchange in the past hasn’t even employed this structure.
The Draft Prospectus built by INX Limited states: “When fully operational, we expect to offer professional traders and institutional investors trading platforms with established practices common in other regulated financial services markets, such as customary trading, clearing, and settlement procedures, regulatory compliance, capital and liquidity reserves and operational transparency.”
The prospectus continued to read: “Our vision is to establish two trading platforms and a security token that provides 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 trading opportunities for each class. In the future, we intend to establish a platform for the trading of derivatives such as futures, options and swaps.”
This means that INX Limited will be in the same market space as not just Coinbase Prime, but also Fidelity Digital Assets and Overstock Zero. This extends to the Intercontinental Exchange Bank. These companies operate in security tokens, spotted cryptocurrencies and crypto derivatives.
The Utility-Security Token
Technically, the token being maintained by INX is a security token. However, it could have prospected as a utility token. This is because titleholders will be given the option to continue these tokens through the INX Exchange with a payment transaction fee. During the ICO Boom, multiple crypto exchanges claimed that their tokens were utility-enabled. It’s ironic that more than a year later, INX Limited is the first that can officially make that claim.
Investors into the INX Limited Token will be provided with a percentage of the profits earned by INX. However, these individuals won’t act as equity holders of the utility-security token. Instead, they’ll act more like a shareholder and get repaid over a selected period. In the event of liquidation, all funds will be returned to the investor. This utility-security token will also be represented on Ethereum Blockchain as an ERC-20 Token.
The Draft Prospectus Document states: “The Company intends that the INX Token holders’ claim for breach of contract will be senior to the rights of the holders of the ordinary shares of the Company in liquidation.”
The Hurdles of Regulation
The cryptocurrency asset is an unprecedented phenomenon that’s still unknown for large percentages of traders. Cryptocurrency IPO’s don’t work in the same as in the Stock Market. This has caused several regulating agencies to create legislation that determines multiple subsections of the crypto and blockchain industries. Subsequently, INX Limited must receive clearance from these several regulators before it’s deemed legal for the company to sell its IPO across the United States of America. The Draft Prospectus discloses that publicly listed companies must receive approval before beginning operations or significant fines ensue. Currently, the Securities and Exchange Commission hasn’t approved of the prospectus draft created by INX Limited. Considering that the application is unheard of in the USA, its unknown is the prospectus will be approved or denied.
Considering that this F-1 Filing is built for fundraising only, INX Limited will still need to be approved and regulated to trade their IPO. This requires the firm becoming a legally tendered broker-dealer in the United States of America. This involves training from both FINRA, and SEC. Extensive training can only be completed through the alternative trading system and self-regulatory organization. The final task that this firm will need to complete is receiving their money transmitting licenses in the states where the INX Token is offered. Accomplishing all these tasks can take longer than a year, but the rewards can be substantial.
The Allstar Group
INX Limited is compiling their best employees with new employees to run the INX Token. Upper management, board members, firm advisors and early investors will all be grouped to combine the traditional/modern finance worlds. The cryptocurrency management team with the INX Token will include Mark Yusko, Jameson Lopp& Samson Mow. Yusko is the CEO for Morgan Creek Capital Management, Mow is the CSO for BlockStream, and Lopp is the Bitcoin Security Stalwart for INX.
The traditional management team which will help bridge the gap between the two financial worlds include Alan Silbert, Barry Silbert, David Weild and Thomas Lew. Alan is the Executive Managing Director for the Digital Currency Group, and Barry is the Vice president of the Digital Currency Group. David is the prior vice-chairman for Nasdaq, and Thomas Lewis is the previous chief executive officer with TD Ameritrade.
The investors included with this group is Charles Lee and Riccardo Spagni. Both individuals helped drive the beginning operations of INX Limited, allowing for the company to thrive to new heights. Unfortunately, it’s unknown if the SEC will approve their draft prospectus. Regardless of what happens, retail clients and traders can expect big things from INX Limited in the future.