The Ontario Securities Commission has granted limited-time approval to TokenGX Inc. (TokenGX or the Company) for the creation of a blockchain-based security token (token).
TokenGX sought approval to create its blockchain-based security token trading platform (the Platform) through the OSC’s Launch Pad. The Company is an affiliate of TokenFunder Inc. which had been granted regulatory relief for an ICO (Initial Coin Offering), also referred to as an Initial Token Offering (ITO), in October 2017. TokenGX’s Platform would facilitate the trading among investors of their tokens that were distributed under prospectus exemptions to facilitate capital raising for issuers and to provide liquidity for the investors.
The Company has already completed its capital raise through an ITO (Initial Token Offering) under the offering memorandum prospectus exemption (the OM Exemption) in section 2.9 of National Instrument 45-106 Prospectus Requirements (NI 45-106), and is registered as an Exempt Market Dealer (EMD) to operate the Platform in British Columbia, Alberta, Ontario, and Québec.
Regulatory relief was granted for the pilot test period by the OSC under the applicable securities legislation:
- section 15.1 of National Instrument 21-101 Marketplace Operation (NI 21-101) for relief in whole from the requirements of NI 21-101;
- section 12.1 of National Instrument 23-101 Trading Rules (NI 23-101) for relief in whole from the requirements of NI 23-101;
- section 10 of National Instrument 23-103 Electronic Trading and Direct Access to Marketplaces (NI 23-103) for relief in whole from the requirements of NI 23-103; and,
- section 74 of the Securities Act (Ontario) (the Act) for relief from the prospectus requirement in section 53 of the Act (the Prospectus Relief).
The Decision will expire the earlier of twelve months after the closing of the first completed ITO of an issuer on the Primary Distribution Platform and April 16, 2021. OSC staff caution that it should not be viewed as forming a precedent.
The Decision, In the Matter of The Securities Legislation of Ontario and in the Matter of TokenGX Inc. (The Filer) is available for download from the website of the Ontario Securities Commission.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.
