Which Exchanges Can INDX List On?
Unlike Initial Coin Offerings (ICOs), Secure Token Offerings (STOs) are regulated securities that entitle the owner to a share of the profits of the business, a stake within the business itself or some other form of reward in exchange for their investments.
The INDX token is a regulated STO, distributing quarterly dividends to INDX token holders by aggregating rewards generated by Masternodes as an underlying asset. At the heart of INDX’s business model, is a stringent compliance architecture that qualifies investors to maintain the integrity of the INDX token and platform. Increased regulation of the crypto space has meant those interested in security tokens are required to provide KYC/AML compliance checks before they can buy, sell or transfer them. The same rules apply for security exchanges, which are also mandated to be fully compliant in order to offer their services to buyers and sellers of such tokens. This makes the decision of where to list a token like INDX somewhat challenging. After all, we can’t just approach the top ten exchanges and request their listing fee. It is important that we do our due diligence and only approach exchanges that are fully licensed by local authorities to sell security tokens. As you can imagine, this limits the playing field somewhat.
INDX must consider a number of factors when considering exchanges to list with but two stand out as the most critical. The first is that of compliance. INDX has formulated a compliance guideline that we adhere to, which may differ from the compliance requirements of some exchanges that list security tokens. Sometimes these requirements may align and other times they need adapting due to a lack of regulatory frameworks governing the space. Combining two sets of regulations for companies in two different countries can prove to be complicated and contradictory, however INDX prides itself on complying with as many of the regulations that secure our token and product offering.
Secondly, we understand the importance of liquidity. There now exist hundreds of crypto exchanges, but a small handful monopolise the majority of the trading activity and volume. It would be unfair to our investors if we chose to list on an exchange with low volume, simply because it is the most straight forward from a regulatory standpoint. We want to be proactive in selecting exchanges where, in the event an investor wants to sell their tokens, there is an opportunity to do so at the market price. It is vital that we balance the regulatory aspects of any potential exchange with the liquidity it provides so that our investors may easily convert their INDX token to another major cryptocurrency or back to fiat currencies.
We are fortunate that in 2019, there are a number of exchanges that have the potential to meet our needs, with more coming down the pipeline. Having been in conversation with various exchanges at numerous points since our inception in 2018, we have been able to see first-hand what has been surfacing in the security token space. This has given us an opportunity to solidify relationships and establish strong rapport with exchanges to serve INDX and our investors the best way.
There is of course the possibility that INDX launches on a decentralised exchange (DEX). There are a number of DEXs in the market, but few are 100% decentralised, which has an impact on our ability to list there. As an example, in June 2018, one of the most popular DEXs, IDEX, had to delist NEXO because it was a security token paying out dividends. Many people thought IDEX was a decentralised exchange, but this action proved otherwise, and IDEX wanted to reduce liabilities with the Securities and Exchange Commission (SEC). At INDX we want to ensure we don’t fall victim to this issue. A fully decentralised exchange would most likely work with regulations and, if the issuer produces a compliant token like INDX, these may very well be a great answer in the future.
One of the roles an exchange like Bancor fulfils is that of a liquidity provider. Once an ICO or STO is complete, the project “ringfences” a portion of the minted tokens to hand over to Bancor as well as buying Bancor tokens (BNT) to the same fiat value. This creates an immediate liquidity pool between the two tokens through a proprietary relay system. When tokens are bought and sold, the pools are balanced in order to maintain an equilibrium to allow buyers and sellers to carry out transactions. The idea of this isn’t to encourage daily trading of tokens in a speculative manner, but is instead aimed at reassuring holders they will be able to sell their tokens should the need arise.
There are a number of factors to consider when it comes to listing INDX on an exchange. Fortunately, there are a number of great candidates for security token exchanges available. We will endeavour to ensure that the exchanges we choose to list our token on will offer the utmost liquidity, convenience, and security that our investors seek.
