INX’s $130M IPO to Launch Next Month as Exchange Seeks NY BitLicense

Crypto and security token exchange INX is proceeding with its planned $130 million initial public offering for its own security token that will run on Ethereum. The company is about to launch a roadshow and is targeting April for the IPO. In order to appease US regulators, INX will be moving its headquarters from Gibraltar to New York. This marks a dramatic shift in the regulatory environment as they will need to obtain the onerous BItLicense.

According to the prospectus, the offering does not grant equity rights but entitles token holders to receive pro rata distributions of 40% of the company’s net cash flow from operating activities. The token can also be used to pay trading fees at a 10% discount compared to alternative forms of payment. In the event of bankruptcy, token holders will get repaid after debt holders but ahead of equity holders.

Why it matters

• Exchange tokens have become pervasive across most of the top crypto exchanges. The majority of which were offered as non-securities despite the fact they have adopted pseudo claims on the company's cash flows putting them in “capital stack purgatory”. INX’s offering is distinguished from most existing exchange tokens as they are going through the legal hurdles to comply with existing regulations. By legally encoding the structure of the token INX cannot change the features on a whim giving it a more straightforward means of value accrual.
  
• The idea of non-debt or equity investment vehicles that offer some sort of claims on a company's cash flow has captured the attention of the crypto community. They offer a fundamentally new means of getting financial exposure to the growth of a company. By opting to go by the books rather than skirting regulations, INX could be taking an important step to legitimizing exchange tokens and putting their long-term viability to the test.