Hassans assists setting up crypto security token with US Commission

Hassans International Law Firm has assisted cryptocurrency trading platform INX in setting up the first ever Initial Public Offering of a security token registered with the US Securities and Exchange Commission.

An IPO is the process by which a private company can go public by sale of its stocks to general public.

The IPO structured through Gibraltar is the culmination of a process which INX embarked upon, with Hassans, around two years ago.

INX has been engaged in a lengthy, often arduous process of dealing with queries and requests for further information from the US Securities and Exchange Commission [SEC] over the last two years.

There have been nine rounds of feedback during which the project has come under heavy scrutiny, focusing in part on the reasons why INX chose Gibraltar as the jurisdiction and, further, the provision of extensive feedback in relation to Gibraltar law, Hassans said in a statement.

Partner at Hassans Aaron Payas has led on the INX project from its inception called it a “watershed” moment for Gibraltar.

“I am thrilled that we have been able to secure this confirmation from the SEC,” Mr Payas said.

“This represents something of a watershed moment, not just for Gibraltar as a jurisdiction which took the initiative and seized the opportunity of the distributed ledger technology and wider fintech space, but also for the industry as a whole.”

“The SEC has been robust in its approach to cryptocurrency, taking a wide view of the definition of security to largely include utility tokens, thereby making the offer of such virtual assets in the US subject to the very substantial body of securities law and practice there.”

“Some projects opted to enter the US market by relying on exemptions and, in respect of those who didn’t, or did not properly do so, the SEC has issued a record number of subpoenas. Unregistered token offerings have quickly come under fire of the SEC’s traditional heavy handedness in respect of many of the hundreds of token offerings seen during the 2017 boom.”

“There have been numerous examples of settlements entered into with the SEC or outright bans being doled out by it. The approach by INX to its own fundraising has been in stark contrast to the many ICOs we have seen in Gibraltar and elsewhere which have tended to actively seek to avoid falling in scope of US securities legislation by means, often, of excluding US investors.”

“INX understands its market and knows that its success is inextricably linked to being able to access investors/customers in the US. It therefore took the decision to develop and deploy a security token and to work with the SEC to develop the project in full compliance with the relevant securities provisions.”

Mr Payas added that INX is a Gibraltar company, constituted and operating under the Laws of Gibraltar, marking a “matter of some pride” for the firm and the crypto exchange.

He called this an “excellent development” for the jurisdiction, the efforts of which in the DLT and wider fintech space are being validated by the successful filing of the INX security token.

Making a public offering of tokens in the US had long been the ambition of many projects in the industry something that was thought by many to be impossible, Mr Payas said.

“We are looking forward to continuing to work with INX on this project as it moves towards the next phase of its development – the fundraise,” Mr Payas said.

“We are delighted to be a part of this development and look forward to working with others hoping to emulate the success of INX.”

Gibraltar continues to see a growing interest in the jurisdiction as a centre of excellence for blockchain business, a statement from Hassans said.

On working with Hassans, Shy Datika, Co-Founder and President of INX, noted how Hassans were able to make their vision into a reality.

“Our vision for INX and the INX Token required a solid foundation of regulatory clarity for security tokens and cryptocurrencies,” Mr Datika said.

“With the regulatory construct of Gibraltar and the expert guidance of Hassans we were able to make our vision a reality.”