Crypto Regulation: The only one who can fix the wrong is you

David | December 8, 2022
5 min read

In the mayhem of the events of 2022, regulation, or lack thereof, is not the issue. Rather, it is those who choose to participate without regulation and, in doing so, have no protection in the case of dishonest and fraudulent actions related to securities and the stock market.

Unlawful activities and transactions can occur in every industry when no system of checks and balances existsss.

It is the right and responsibility of every investor to ensure that they do their thorough due diligence at every turn and take advantage of the legal protections to which they are entitled. Although the market may find itself in a precarious situation with the current industry mayhem and the alleged crypto winter, let’s assess where we are and position ourselves accordingly. The right choices are available to us.

When the stock market crashed in 1929, the US lost confidence in the markets. Then came the SEC, formed in 1934 by Congress.

The SEC is the official agency that administers and ensures that the US Stock markets remain validated as a free and fair marketplace for businesses and individuals to interact in a protected environment. The success of this system is only possible with the backing of law enforcement, the very backbone of the SEC mechanism. 

This backbone is now well established and serves its purpose, but cannot be taken for granted. When choosing to conduct your digital business, be it investing, trading, raising funds, or issuing tokens, from the initial fundraising to placement on the trading platform to receiving payments directly into your wallet, make sure you are safe. You have the choice to work with a company committed to regulation and working under the SEC umbrella. In doing so, you can make educated and calculated decisions every step of the way. Although the industry is speculative, we can eliminate much of the risk by choosing the right working partners to secure our funds and protect our assets. 

The path to trading responsibly

One of the most popular innovations within the digital economy in the last few years has been the development of security tokens. In principle, these tokens have all the attributes of a traditional security with added features designed specifically for this new asset class. 

From initial funding records and smart contracts which detail every aspect of the transaction on the blockchain, this innovation has ushered in the future of financial markets, highlighting the democratization of digital finance.

Just as every exchange and provider is not the same, unsurprisingly, not all security tokens are the same. Further, a utility token must not be assumed to be a security token

A security token signifies a form of ownership in a company, with a view to profit from the said company or debt of the company to its creditors, whereas utility tokens imply a form of payment rather than ownership. 

One of the outstanding benefits of a security token is that the SEC has noted that it has the attributes to be classified as a security based on the Howey Test – a legal precedent that defines the class of securities as per SEC guidelines. In these circumstances, every player and every transaction falls under SEC regulation, thereby affording all parties to such a contract the same protection as any public entity which falls under SEC regulation. Bear in mind that it’s up to you to make sure you choose an SEC-registered security token investment and a regulated trading platform to match it. Today, it seems, there’s notably one platform that is fully regulated and provides you with only regulated security tokens. INX occupies a unique position within this space, having set a precedent in becoming the first fully regulated SEC entity in this regard. And fittingly, INX launched its own security token under SEC guidelines, which trades on the INX.One platform…talk about putting your money where your mouth is!

Choose wisely

It is hard to navigate between so many options, attractive offers, and great hopes. Still, the current chaos is an important lesson to all of us, to not give up on innovation and on what may be beneficial to our future, but rather be responsible and choose wisely. In order to ensure your safety, here are the standout features to be looking for when entering the world of Security Tokens:

  • Exchange Token should not be used as collateral
  • Transparency of holder’s identities
  • Secure reserve fund, fully audited 
  • Withdrawals of any currency at any time
  • Carefully vetted cryptocurrencies
  • Leveraging and re-investing traders’ assets prohibited
  • No token burning
  • Profit sharing
  • Legally enforced rights for holders
  • Can be used as a utility
  • One platform merging cryptocurrencies and security tokens
  • SEC-regulated primary offerings on the platform
  • A US regulatory foundation secured with a licensed digital broker-dealer and an ATS
  • Your wallet. Your keys

Pick Safety. Choose Regulation.

David December 8, 2022

Crypto enthusiast, help businesses plug into the token economy


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