As of November 5th 2018, Maltese exchange LXDX has announced plans to launch a Security Token Offering. The ERC-20 security token will abide by all applicable Maltese laws and will collectively represent a 10% valuation of LXDX.
Details of the Upcoming Security Token Offering
LXDX is a Maltese cryptocurrency exchange co-founded by Joshua Greenwald, a former engineer for Elon Musk’s SpaceX. The exchange, which claims to operate with military-grade security protocols, has officially announced a Security Token Offering (STO).
The exchange will issue a total of 5 million tokens, which will cumulatively represent a 10% ownership share in LXDX. Each token holder be entitled to their respective share of 10% adjusted gross revenue, which will be distributed to holders on a quarterly basis. In terms of the offering, each token will be priced at €1, and will only be available to qualified investors.
For the sake of compliant secondary market trading, each token will be an ERC-20 restricted smart contract. Ultimately, these will be offered as a security to investors in accordance with Maltese laws. Each token will represent ownership in LXDX, entailing both equity plus dividend rights.
How Tokenization Benefits both Businesses and Investors
The announcement comes in the midst of the uprising wave of security tokens. The added benefits of tokenization result in a level of liquidity which has never been seen in traditional securities. Fractionalized ownership increases investor access, which lowers the often difficult requirements of raising private capital.
In addition, another major advantage involves the clear regulatory guidance for securities. Unlike utility tokens— which fall under ambiguous regulatory requirements both in the United States and abroad— securities have existed for decades. In fact, many of their ruling authorities have existed for extensive periods of time— such as the SEC which was founded in 1934.
Therefore, the only novel aspect to security tokens is their tokenization. If the pre-existing laws and regulations can be algorithmically enforced through smart contracts and tokenization protocols, then theoretically, there should be no regulatory concern for security tokens.
Just as tokenized securities are said to soon replace traditional financial securities, the STO is predicted to replace the conventional Initial Public Offering (IPO). The STO simply offers new ways for companies to raise capital without the arduous task of going public, while investors experience groundbreaking liquidity and have increased access to investments which would otherwise be too costly.
How LXDX will Focus on Exchange Security
With the always present threat of hacking, the LXDX exchange is taking added security measures to ensure both the safety and efficiency of the new security token.
Chief Technology Officer Steven Thomas— former US Navy Cryptologic Technician— leads LXDX development. He claims that LXDX will not only be one of the fastest, but one of the most secure exchanges to date:
“Between our software, hardware custody solutions, and real-time trade surveillance, we are setting the standard for security and trust in the industry. We’ve structured the LXDX system to enable ultra-secure information compartmentalization.”
The LXDX STO has already experienced investor interest. Investors such as Dymon Asia Ventures, Arianna Simpson of Autonomous Partners, and Robert S. Murley— Chairman of Investment Banking for the Americas and limited partner in Pine Point Capital— have all backed LXDX.
As the benefits of security tokens become increasingly known by those throughout the greater blockchain industry, others are likely to follow suite. STOs have the legitimate potential to become the premier form of private capital acquisition.
What do you think of LXDX’s upcoming Security Token Offering? Will STOs go on to replace IPOs? If so, how long will that take? We’d love to know what you think in the comments below.
Image courtesy of TechBullion.
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