TLDR. Well it depends, said the consultant punching the clock. Will Security Tokens enable scammy operators to separate dumb money from their money? Or will Security Tokens power a new wave of innovation to make the world a better place (perhaps via “digital cooperatives”).
First, the news, well reported in many venues, that INX Limited becomes the First SEC-cleared security token IPO. From their press release:
“INX Limited today announced that the Securities and Exchange Commission (SEC) has declared as effective its registration statement on Form F-1 filed in connection with the initial public offering (the “Offering”) of up to 130 million INX Security Tokens (the “INX Tokens” or “Tokens”). INX has set the offering price at $0.90 per Token with a minimum investment of $1,000. It is anticipated that the Offering will begin on August 25, 2020 at 10am Eastern Daylight Time at https://token.inx.co/“
Daily Fintech has been tracking the Security Token market since they first appeared on our radar after the ICO bubble burst in 2018. In May of this year I was trying to figure out if Security Tokens were in a coma or just taking a short nap, as activity had slowed a lot.
The INX IPO indicates that life maybe coming back to the Security Token market.
Note: The legal advisor to INX is Hassans and Sheldon Freedman, who has been helping us track the Security Token market, works at Hassans. I have no commercial relationship with INX and the opinions expressed here are my own.
Security Tokens are crypto in how they are traded and settled (ie efficiently) but securities in how they are regulated. This is not the ICO market and Security Tokens are NOT Altcoins. They are assets. In that sense, Security Tokens are like CBDCs in the Stablecoin world.
The SEC which is the regulator for the INX IPO, is mandated to protect the investor. They and other US regulators such as FINRA are tough cops who go after firms whether they are legacy or Fintech/Crypto.
Securities should be regulated, but SEC and other regulators must be smart about enabling good innovation and not protecting incumbents and being as tough on legacy firms as they are in crypto upstarts. If that can manage this tricky balancing act, Security Tokens should be a force for innovation that will help make the world a better place and not simply a way to entice more retail investors to make money for brokers by buying high and selling low.
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