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The Downfall Of De-Regulation: How Binance Could Have Learned From INX's First-Ever SEC-Registered IPO On The Blockchain

We have reached the tipping point in the demand for cryptocurrency regulation.

Benzinga · 06/09/2022 12:43

We have reached the tipping point in the demand for cryptocurrency regulation. The United States Securities and Exchange Commission is investigating whether Binance (CRYPTO: BNB) broke securities rules when it launched its token in an initial coin offering (ICO) five years ago, Bloomberg reported on Monday. Investigators are examining whether the 2017 ICO amounted to the sale of a security that should have been registered with the agency. 

On May 6, Reuters published a lengthy special report alleging that Binance processed at least $2.35 billion of transactions from hacks, investment frauds, and narcotics sales between 2017 and 2021 and had weak Know Your Customer (KYC) and Anti-Money Laundering (AML) protections for those years. 

INX Group registered their security when this token was ICO'ed. It took over 950 days and was the first to register its token as a security and IPO on the Blockchain through a Security Token Offering (STO). Companies offering STOs are subject to the registration and filing requirements of the U.S. Securities and Exchange Commission (SEC). Some of the regulations companies must comply with are Regulations A+, S, and D.

A security token is digital, traditional security on the blockchain, backed by tangible assets, company revenue, or profits, so it cannot go to zero, leaving holders empty-handed. Ownership is verified via the blockchain using smart contracts, and the entire process is viewable to anyone. Investors purchase anything with the expectation of future returns, and when they purchase security tokens, they are protected under security laws. 

They are actively working to enable their users to trade responsibly. They are committed to following regulations and preventing bad actors from trading on the platform. The platform requires that users undergo an extensive KYC process which will extend to their new app launching this week. They have put in the time and work to ensure that users are protected, that security tokens and crypto are adequately regulated, and that extensive due diligence is performed on anything listed. 

This new regulation chapter laid out by the Responsible Financial Innovation Act, drafted by Senators Lummis and Gillibrand, will be a time of learning and growth for this industry. Let this represent a bright future for crypto safety and regulation, where more and more people can feel safe and secure participating in a tokenized economy.