INX Limited, a Gibraltar-based private company formed in 2017, announced on August 24 that the U.S. Securities and Exchange Commission (SEC) declared as effective INX Limited’s Form F-1 registration statement. A Form F-1 is the registration required for foreign companies seeking to issue securities under U.S. federal law. This approval marks the first instance in which the SEC has cleared a full registration statement for a public offering of crypto-tokens. The SEC has previously approved companies seeking a public offering of crypto-tokens under what is referred to as a Reg A+ exemption, which requires disclosures that are less than those of a full registration statement and limits fundraising to US$50 million.
According to INX Limited’s registration statement, INX is offering 130 million INX tokens at 90 cents each, potentially netting $117 million. The proceeds from the public offering are earmarked to develop a platform that will allow trading of cryptocurrencies, security tokens and their derivatives. The INX tokens can be purchased with fiat currency and, after the company reaches a minimum US$7,500,000 capital raise, with BTC, ETH and USDC. INX tokens can be received in an ERC20 compatible ethereum wallet address. INX Limited describes its token as offering securities benefits—e.g., profit sharing and liquidation preference—and utility benefits—e.g., fee discounts and staking.
Although this development signals a positive development in the SEC’s acceptance of crypto-tokens, other challenges continue to persist for crypto-related companies. INX acknowledges in an SEC filing that, “[t]here is currently no public market for the INX token and no guarantee can be provided whether such a market will be established . . . . As a result, purchasers in this offering, and subsequent purchasers of INX tokens, will likely be limited in their ability to engage in secondary trading of INX tokens.” The company acknowledges further in its SEC filing that legal uncertainty regarding the trading of security tokens, including regulations governing market intermediaries, “may cause significant delay or may prevent us from developing our INX Securities trading platform as currently envisioned.”