Introducing Security Tokens 2.0
A number of people outside of our industry have asked us to explain the significance of the SEC granting effectiveness to the INX Security Token F-1. I’d like to answer this question here.
Security tokens are not new. They have been around for a number of years, and have typically been linked to either cryptocurrency funds or real estate assets — primarily out of Germany and Switzerland. Issuers of these tokens usually issued with a market capitalization below $50 million, and investors were subject to considerable lock-up periods, which meant that secondary trading was often delayed by 6–12 months. The pool of investors was also limited to those deemed to be accredited under U.S. law. In other words, only wealthy individuals.
INX realized that security tokens were an important destination in the legacy to digital migration. However their flaws limited their adoption. Full adoption would only come if there were no lock-up periods, if the general public was welcome to invest, and if market capitalizations of issuers grew to over $50 million.
In 2017, INX approached Ernst & Young, along with our law firm, McDermott, Will & Emery, and together we created a plan to change the digital assets landscape forever by working with the SEC to create a security token that would open the floodgates to global adoption. The result of the many conversations that occurred between us, our lawyers, our auditors, and the SEC over 953 days was our F-1. Our F-1 now works as a roadmap for any company that wishes to list a liquid security token. Our F-1 opens the world to “Security Tokens 2.0” — an improved version of the limited 1.0.
Not only did we create a digital asset that could be freely traded by anyone, but we also used smart contracts to ensure KYC/AML at all times. With our smart contract acting autonomously to make sure that no INX Token ever moves to a wallet that has not passed through KYC/AML and been whitelisted by us. The INX Token is the first U.S. security where ownership proves you have passed KYC/AML.
The INX token is also the first U.S. security to accept cryptocurrency payments during the IPO process. It is often said that cryptocurrencies will only be a currency when they can be used to pay taxes… Well, with INX, crypto can be used to purchase an SEC registered security… we are getting closer.
We always saw that digital assets were the future and that security tokens needed to be upgraded. So we went the long route in order to do just that. We believe in the digital future so much that we are doing our IPO using the token we designed. And the money we raise from this IPO will be spent opening up the cryptocurrency and security token trading platforms that we believe will benefit from the inevitable migration of assets from the legacy world to the digital.
As we continue the IPO we welcome token buyers into our community. Our community increases daily, growing around 50% just this past week. We are excited that our vision and so much more, is shared by so many; and are excited to launch in 2021!
To get a greater sense of our vision for digital assets please check out our videos here.
To subscribe to the INX Token IPO please visit token.inx.co
And for more information on the company please visit inx.co
About the author:
Mr. Douglas Borthwick is Chief Marketing and Business Development Officer of INX Services. Mr. Borthwick has over 25 years of experience in the finance industry, most recently founding and building the Chapdelaine FX electronic and voice trading business for inter-dealer broker TP-ICAP from 2012 to September 2018. Mr. Borthwick held various roles with Morgan Stanley from 1996 through 2005; managing foreign exchange derivatives trading groups in New York and London, with a strong focus on emerging markets. He then ran the strategic trading desk at Merrill Lynch from 2005 to 2006, and the Latin American FX trading business at Standard Chartered from 2006 to 2009. In 2010, Mr. Borthwick managed trading and research areas for startup foreign exchange agency, Faros Trading, a company that was later sold to FXCM in 2013. Mr. Borthwick holds a bachelors of science in Economics from Carnegie Mellon University and an MBA from Yale University’s School of Management.
