The Regulation Concern: How FintruX Stays Ahead
Last week, the crypto world was shocked when U.S. and Canadian regulators announced that they have opened ~70 investigations into cryptocurrency scams and fraudulent initial coin offerings as part of a wide-ranging, coordinated crackdown called “Operation Crypto Sweep”.
The Current Situation
Regulatory authorities have always maintained the position that they do not want to put a halt to innovation, and only have the best interest of the public in mind, thus only prosecuting those who pose risks towards their constituents. The North American Securities Administrators Association (NASAA) recently stated that they have sent cease-and-desist letters to operators who they believe are sham crypto companies in more than 40 jurisdictions across the United States and Canada.
At FintruX Network, we believe anticipating events and acting accordingly is more prudent than simply reacting. The team has a strong historical footprint to maintain; with decades of extensive experience in the financial industry in Asia and North America, our development partner’s majority market share in the pass-through-securitization market in Canada, and multiple fortune 500 companies where our directors and advisors play major roles — the importance of regulatory compliance is one of the core values of our company since the beginning.
Balance is Key
In the cryptocurrency space, many examples of clear disbalances of ethics can be observed where regulatory and legal standards have been jeopardized in the pursuit of short term economic gains. Internally, we call them fly-by-night projects.
These projects would do anything to maximize their token merits by enticing the investors with attractive illegal benefits such as equity, profit sharing, voting rights, positioning their sale as an investment, while pretending their token is a utility to defraud everyone. The reality is that they are selling securities without the proper license to non-accredited investors — which is strictly illegal.
Once a court rules that a project is a security threat, many crypto exchanges will unlist the project overnight, foregoing all expenditures made in the past. Additionally, the project will no longer be focused on building a product but instead, the majority of their resources will be spent fighting legal battles that they will most likely lose.
Our Situation
Risk mitigation is one of the most vital aspects of a financial business, especially in the rising business of innovative technologies. Since the conception of the project, we knew that we had to be meticulously compliant. Regulatory crackdowns such as these were inevitable, and we have spent a great deal of resources together with our legal team to manage a compliant crowdsale, build a robust token ecosystem, and innovate a lending workflow that works.
How Our Crowdsale Complied With Regulation
How does our project maintain our status as one of the most regulatory compliant crowdsales conducted?
First and foremost, we engaged with four legal teams that span three different countries — Singapore, Canada, and USA.In order to ensure our crowdsale was compliant with the legal mandates at the time, we were advised to ensure the following was completed:
- Receive a legal opinion that our token is a utility by the standards of the Monetary Authority of Singapore (MAS).
- Incorporate Fintrux Pte Ltd at the most innovative financial hub (Singapore)
- Ensure the mind and management are in Singapore.
- Conduct full KYC (know your customer) and AML (anti-money laundering) verifications for every crowdsale participant.
- Restrict sales from any geographic location that classified the sale of tokens as securities, or had any current or pending laws that would affect the token sale (our list included USA, Canada, China, and over 25 additional countries).
- Access to our website was restricted for participants from admissible countries by using IP-restrictions, as well as residence checks.
- Emphasizing that our token is not an investment vehicle, but rather an entry mechanism into our platform when launched.
- Kept early bonuses within acceptable ranges as to not indicate an expectation of return; the maximum bonus given out was 20% to very early private sale participants, while pre-sale participants were given bonuses of 10%.
- Ensure that each ETH received in the crowdsale had bonuses hardcoded in the smart contract, so that there would be a full audit record available for public viewing.
Due to our rigour on the legal front, FintruX Network managed to establish clarity on the circumstances where the FTX token is allowed to be listed on exchanges, and conversely the standards these exchanges must meet to pass our own requirements.
What Makes Our Token A Strong Utility Token?
The FTX token is a utility token that powers the FintruX Network. It works as a means to reward or get rewarded for participation in our marketplace. This includes but is not limited to:
- Instant matching of the lender and borrower.
- Service fees for rated service providers such as fraud and identity, credit scoring, credit decisions, credit modelling, payments, and currency exchange partners.
- Guarantors receive a portion of the interest in FTX for participating as a third party to back certain loans of their choice.
Additionally, we have shortlisted 5 key elements that FTX will provide to produce its own stable economy and measurable benefits for all those involved as the platform launches:
- Decreasing Market Supply Over Time
- Using FTX for Collateralizing Loans
- Unlocking Discounts on Partner Financial Services
- Rewarding Loyalty and Ensuring Happy Holders
- Using FTX as a Form of Payment
To read more about our innovative ideas, you can visit our blog on tokenomics.
Global Expansion: Our Plan of Action
With our plans to expand our platform globally, there is much scrutiny on how to maintain a compliant operation that won’t be shut down as we branch out to more jurisdictions. This has become one of the most invigorating objectives for FintruX Network.
Any business that handles money in a marketplace setting is very likely to be classified as selling securities; you require a license to operate, and licenses can typically cost millions of dollars for any given jurisdiction. Companies who do not take the care and attention to achieve these guidelines run very high risks of being shut down at any given moment.
To be a globally accepted platform, we first need to obtain licenses in order to sell securities in each jurisdiction. For instance, in Singapore, this can be done by obtaining Capital Market Services License, and in Canada by being an exempt market dealer (EMD). Our first step is getting a license in Singapore, where we are based. Getting a license is an intensive six — eighteen months, and an expensive (>2M USD) process that is required in every country we wish to operate in. As you can imagine, to secure these many licenses is near impossible to by ourselves, thus demonstrating the need to establish relationships with licensed partners in every jurisdiction we wish to operate in.
Therefore, we have planned ahead and established favourable conversations regarding joint ventures with reputable and established financial institutions that have the appropriate license to operate — quickly expanding our FintruX brand across the globe. Aside from operating in Singapore, these partnerships will give us confidence that we can also operate in Canada, USA, Indonesia and Malaysia by early next year.
Additionally, we respect the attractive benefits that security tokens that can offer to their holders, therefore being a licensed operator to sell securities will open the doors for us to legally provide more exciting use cases for our token.
As authorities are cracking down on fraudulent ICO’s, we at FintruX Network are dedicated to comply and adhere to regulations as they are updated. With the rise of the crypto industry, there are unprecedented implications to the future of financing, and with it, unprecedented laws that are being passed. Through hard research, thoughtful decision-making, and an immensely knowledgeable and experienced team backing the platform, we believe FintruX Network will continue to abide by these regulations with tact and consideration to our users to create a robust, secure, and successful ecosystem.
Thanks for supporting us.
Conrad Lin
About us: FintruX Network is the global P2P lending ecosystem powered by blockchain and no-code development. FintruX facilitates marketplace lending in a true peer-to-peer network to ease the cash-flow issues of SMEs that typically face challenges getting loan financing, such as startup companies.
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