As 2021 draws to a close, I wanted to share with you our past, our present and our future.
But first let’s summarize our accomplishments for 2021. By any measure, this was an ambitious and successful year for INX:
⦿ Completion of our registered security token IPO, the first of its kind in U.S. history, raising over $84MM from over 7,200 investors
⦿ Acquisition of Openfinance’s Broker/Dealer and ATS (now, INX Securities)
⦿ Acquisition of NFA-registered interdealer broker, I.L.S. Brokers
⦿ Receipt of state money transmitter licenses in many states - INX is now licensed or otherwise cleared to trade cryptocurrencies in 31 U.S. states and territories
⦿ Significant upgrades to INX Securities
⦿ Partnership announcements with IPEX and Entoro Capital
⦿ Cryptocurrency listings increased with GMO pairs
⦿ Digital security listing agreements signed with EV Biologics and Tinaga Resorts
⦿ LOI signed with ALK Capital, owner of English Premier League’s Burnley Football Club for advisory services on a digital security listing and raise
Our past. Rewind to 2018 when we first approached the SEC. As you may recall, I told them I wanted to do something similar to an ICO, but in a regulated manner, with a fully-registered security. The first ever IPO of a blockchain security. Our initial request did not receive the welcome that I expected. However, as we added the law firm McDermott, Will & Emery, and the accountants Ernst & Young, to the team, things began to move.
The biggest issue we faced was the fact that unlike other IPOs, there was no precedent. We could not simply cut and paste risk factors from another prospectus that had preceded us given we were the very first. The majority of our prospectus was freshly written. This arduous process with the SEC took over 950 days, but resulted in the prospectus that was introduced to the public in August, 2020 when the IPO went effective. The process also allowed us to work with the SEC in defining many of the blockchain terms used today.
The offering itself was very different from any that had come before it. There were no broker/dealers willing or even licensed to take on our issuance. We went to market alone at a time when no one knew of INX given we had stayed silent with marketing during the entirety of the prospectus writing process and through mandated “quiet periods.” Nevertheless we persisted.
In April 2021, we finally closed the IPO and raised over $84MM from more than 7,200 investors in 74 countries. Each of these investors went through unfamiliar hoops before gaining delivery of their tokens given this was the first IPO of a registered security on the blockchain. Interestingly, the average age of investors was 42 years old, which leads to the conclusion that digital securities are indeed for everyone and not just for the Gen Z generation.
We did not sell equity in INX, but rather 40% of our net operating cash flow, if and when it comes in. We sold a vision of our digital future and laid our cards on the table. After receiving the funds we pushed forward on executing on our vision.
We began the process of applying for state money transmitter licenses for the cryptocurrency exchange, we approached a FINRA-registered digital asset broker/dealer/SEC-registered ATS and an interdealer broker, and over the course of the year accumulated several money transmitter licenses - allowing us to operate in 31 states and territories. Openfinance Securities and I.L.S. Brokers were added to the INX group.
The Present. Rather quickly, the volume of the INX Token overtook all other security token volumes, and the price rose from the initial $0.90 to $2.15 as of this writing. The number of holders has also risen, from 7,200 to over 8,500 today.
Once we closed on the Openfinance acquisition, we began overhauling the engines driving the Openfinance platform. As a result, there is improved funding functionality. The team is continuously working on ways to allow for faster investment opportunities where folks can see the price, make a decision and invest immediately. We also changed the name from Openfinance to INX Securities.
Currently there are only a few opportunities for investment on the INX Securities platform, but that should change in 2022 as the groundwork we laid in 2021 turns to execution. We have identified an exciting pipeline for new listings.
Obviously one way to get more listings is to create them by working with issuers on their primary offerings which then transition into listings. We have had discussions with many companies exploring digital security primary offerings - from Chinese consumer apps to Bitcoin miners, gold miners and ESG game changers. We also announced the intent to work with ALK Capital, the owner of an English Premier League team, to create and list the first ever sports-related registered digital security, which is certainly an exciting prospect.
We also focused on strategic partnerships and announced these with IPEX, who are looking to tokenize intellectual property, Entoro, who introduced Securities NFTs, and Solidblock, who continue to lead on tokenized real estate.
These issuers plan on bringing digital security investment opportunities to both U.S. and non-U.S. investors.
One of our listing partners, EV Biologics, announced that they would delist from the OTC, drop their ticker, and list with INX. This is a groundbreaking event that will not be without its own challenges. Our partners have identified close to 225 similar companies, and once EV Biologics sets out the process, we expect the dam to finally break, bringing the vision shared by the former SEC Chairman Clayton, when he said a year ago that he sees ‘all assets moving to the blockchain.’
It takes courage and conviction to be a changemaker, and we applaud all those looking to migrate from the old world to the new.
We haven’t talked much about the cryptocurrency platform, so I will now delve into it. When we first launched we had a smattering of U.S. states and only a few of the major cryptocurrency pairs. We have since added stablecoins from GMO Trust, and I can tell you now that in the coming weeks we will add Algorand, Avalanche, Tezos and Decentraland. Each of these coins have been through our rigorous vetting process and have been approved for listing. This is especially welcome, given over the next few months we will roll out our first native mobile app that will be available for download on the Apple and Google app stores. We have added some early screenshots below:
Adding more cryptocurrencies to the cryptocurrency trading platform is very important, and will increase volumes considerably.
Regarding U.S. states, our money transmitter licenses now encompass 31 states and territories, now covering over 50% of the U.S. population. We are adding to this number every few weeks.
Also in development is a second app that will combine both the cryptocurrency platform and the securities platform under one simple design. Here you will be able to see your securities next to your cryptocurrencies, with an ability to sell one and buy the other as the cryptocurrency to fiat deposit and withdrawal functions get incorporated together with a clean UI/UX.
There has been very little marketing of the INX brand and our products in 2021, but that will change in 2022.
2021 was a year of foundation building and asset accumulation. 2022 will be a year of execution and development. Our community continues to inspire us with their support and their ideas. Many of the introductions to companies for strategic partnerships, raises and listings come from our community, and we encourage you to keep up the good work. We hear you and we value you as our ambassadors in the digital asset space. Momentum continues to build behind our vision for digital assets, and 2022 will bring that vision even closer to reality.
Happy New Year!
CEO and Founder, INX Limited
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