As the Legal Woes of Crypto Giants Mount, INX Digital (NEO: INXD)(OTC: INXDF) Offers the Regulated Solution

David Keller
4 min readJul 31, 2023

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As the crypto market continues to navigate a complex and uncertain regulatory landscape, major exchanges find themselves at a crossroads. The lack of clear consensus among US financial regulators on how to classify cryptocurrencies — as securities, commodities, or something entirely different — has long hampered decisive action. However, in a recent turn of events, Gary Gensler, the chair of the US Securities and Exchange Commission (SEC), has launched a crackdown on crypto exchanges in a bid to establish clarity. Notably, industry giants Binance and Coinbase have found themselves at the receiving end of back-to-back lawsuits, accusing them of various securities violations and operating illegal exchanges, respectively. The tumultuous regulatory environment has left these exchanges searching for new partnerships and opportunities to achieve compliance.

In the midst of this regulatory storm, Ripple, the major crypto payment and exchange company, achieved a significant legal victory against the SEC. A court ruling on July 13 declared that Ripple’s crypto asset, XRP, is not a security, challenging the SEC’s theory that all crypto tokens standing alone are securities. This landmark decision not only strengthens Ripple’s standing but also provides a beacon of hope for the entire crypto industry, signaling a potential shift towards more definitive regulations and setting a precedent for how other crypto assets may be classified in the US.

And looking in the background remain the cautionary tales of LUNA, Celsius Networks, and Sam Bankman-Fried’s FTX. This inglorious collapse of these crypto exchanges that once dominated a significant slice of market share has exerted a palpable chilling effect on both retail and institutional investments into the blockchain space. Though litigation remains ongoing in these cases, the lengths to which US authorities went to pursue and apprehend the masterminds of these three mega-scams underscores the pressing need for regulatory clarity in the world’s largest economy, which is expected to set the stage for similar action from authorities in the EU and APAC.

Amidst this upheaval, an intriguing player has begun attracting more attention for its unique approach to the industry’s growing need for regulation. INX Digital (NEO: INXD)(OTC: INXDF) is a blockchain technology provider that has pursued US regulatory compliance since its inception. INX’s claim to fame is that its security token was the first SEC-registered IPO in the blockchain world. Since then, the company has introduced INX.One, a fully regulated platform that incorporates functionalities for trading cryptocurrencies, tokens, and capital raise events under a single umbrella.

INX’s regulatory credentials are impressive, and represent a paradigmatic example of what the future of the crypto space could look like. Notably, it holds a broker-dealer license granted by the SEC, demonstrating its compliance with stringent regulatory standards. Additionally, INX is an SEC-registered Alternative Trading System (ATS) and a member of FINRA/SIPC, further solidifying its commitment to operating within a regulated framework.

To facilitate operations across the United States, INX holds money transmitter licenses (MTL) in 46 states and territories, ensuring compliance with state-level regulations. Furthermore, the company’s Transfer Agent license enables public and private companies to raise capital and list digital securities, adding another layer of regulatory oversight. Lastly, as an institutional FX broker, INX is a member of the National Futures Association (NFA) under the Commodity Futures Trading Commission (CFTC), ensuring adherence to strict regulatory guidelines in the forex trading arena. With its comprehensive suite of regulatory credentials, INX positions itself as a trusted and secure platform for investors seeking compliant and regulated crypto solutions.

These days, the future is looking rosy for INX Digital as other players in both the crypto and broader FSIB increasingly seek regulated solutions to trading and initial offerings. In June, Republic Group, a NYC-based financial services provider, announced a $5.25M pre-money investment in INX. A further caveat was that the two parties signed a non-binding term sheet that dangles the possibility of a fully acquisition of INX equity with a valuation ceiling of $120M. On the heels of the Republic Group investment, INXD and INXDF share price has increased sharply, indicating that the company’s valuation is already on the rise.

Though attention remains currently fixated on Republic Group’s blossoming strategic collaboration with INX, I wouldn’t be surprised if this isn’t all she wrote. The demand for regulatory-compliant trading and exchange platforms for the crypto space is acute, and INX is a perfectly positioned supplier. Though they have remained mum, I would wager other major exchanges currently facing or anticipating legal woes or regulatory obstacles in the US market are watching INX closely. Acquisitions are like blood in the water — once spilt, sharks start circling from far and wide.

Disclaimer: this is not financial or investment advice, but rather a reflection of the author’s personal opinions.

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David Keller

Market analyst into the intersection of technology, finance, society, politics, and macro-econ. Straddles the NY-TLV axis. Fortis Fortuna Adiuvat.