The time for digital titles has arrived
Last year’s Robinhood GameStop debacle sparked calls for upgrading the trading infrastructure to democratize investment opportunities for retail investors.
We are seeing an increased demand from a younger generation of investors for more individual autonomy and more control over their investment actions. For example, investors demand the ability to withdraw their assets from the exchange and move positions from one platform to another or earn income when their assets are loaned to someone else. They seek true transparency in markets that have become too complacent with opaque coins. They demand co-ownership and the ability to trade assets 24/7/365.
Digital securities, for all intents and purposes, were expressly built with this new generation of Gen Z investors in mind. Prior to 2018, digital titles or “security tokens” offered all the attributes that investors demanded with one huge limitation – they were largely limited to accredited investors and, given this, volume was limited and only a handful of investments were available.
INX (NEO:INXD) realized that one way to mainstream digital securities was to make them available to retail investors without the exempt bid lock-up periods. To enable this significant leap forward, the company spent more than 950 days working with the SEC and its advisers to create a title that appealed to regulators, investors and issuers. This resulted in the first IPO of fully registered security tokens on the blockchain.
Declared effective in August 2020, the INX token serves as an example of how a digital security can be structured for retail investors. It required a full prospectus detailing risk information for a blockchain-based security and it served to provide investors with fuller transparency on the company’s vision and business plan.
The INX token and its prospectus now serve as a roadmap for assets to transition into the digital future. In the digital world, many other possibilities are within your control.
This potentially means a world where 24/7 trading becomes normal and fractional ownership is encouraged. If your platform or exchange prohibits you from buying or selling, simply remove your digital security and trade it elsewhere, even peer-to-peer. If a company releases exciting news on a Friday afternoon, investors won’t have to wait until the weekend to start investing.
As digital securities seek to provide solutions to overcome the limitations inherited from the capital market, their mass adoption is inevitable…first a trickle, then a river, then a tsunami. Change is coming and it is coming fast, but don’t take our word for it. Listen instead to what former SEC Chairman Jay Clayton noted when discussing the actions as he walked through the door: “…It could very well be that all these actions become symbolic…”
© 2022 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.