Transcribed from: https://tracyfirm.com/initial-exchange-offerings/
So the initial exchange offering, right? It’s new and I like it. You know, what you have is an ICO that takes place through an exchange much like an IPO. And I think that’s actually a good start, and I like it for its redundancy for couple reasons: 1) You know that there’s actually an active market, or will be a market for the token that you’re purchasing, right? Too often you see tokens that can’t get listed on an exchange — I think majority of them can’t get listed on exchange (which I can with by the way) and then there’s just no liquidity, and so you just can’t sell. Well if it’s already listed on an exchange, at least you know or you go into it knowing that you have the ability to have that token listed and the ability to sell. So, it’s good for that reason. 2) It shows some financial wherewithal by the promoters because there is cost, obviously, to list on exchange, right, so it’s one these sort of fly-by-night operations. There’s some amount — it maybe not be a great amount, but it’s something. 3) It makes sure that their tokens get put in enough people’s hands, right? I think there’s a greater chance of success. There’s a greater chance that you get a robust token holder vase, which only has the tendency to create liquidity for the token, which again if you’re looking to sell or you’re looking sell down the road, you have that that option. The trick is of course unlike, you know, not unlike an ICO all the rules still apply, right, like all the securities rules, all the peril you can find yourself in by potentially doing an ICO, especially if it’s a security token offering, those still exist. Just because you’re selling through an exchange, doesn’t mean that it doesn’t count as an ICO or that Reg D of the Securities Act doesn’t apply or anything like that. And also as an exchange, for my exchange clients, you know, you have to worry about it, and this happened in the likes of like token lot and dragging chain and others, if you’re actively promoting tokens that are securities and you’re selling them and you’re taking commissions, well then you could be acting as an unlicensed broker-dealer run into peril doing that. So something definitely to watch for. Happy to, you know as always, answer any questions people have on the initial exchange offering, but visit me tracyfirm.com and I’m happy to go through this, but I think it’s a positive element. And I think more ICOs should go the route through an exchange. See you later.
Questions? Contact Adam S. Tracy here.
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A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.
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