In our June edition of Ask-Antoni-Anything, our Co-founder and Managing Partner Antoni Trenchev addressed all your questions about the NEXO Token, our upcoming business plans, new features, and more. As always, your questions were well worth his while.
If you missed the AMA or want to go over Antoni’s insights again, you can watch the full recording on the link below or read our recap:
Can you please confirm that the NEXO Token is no longer a security? If yes, when is Earn in NEXO coming to the US? If no, why not?
No, I cannot confirm the legal status of the NEXO Token. There is only one institution that can give you a definitive answer here and that’s the Securities and Exchange Commission (SEC). We have a good working relationship with them. In fact, Nexo was one of the few companies in the crypto space that registered with the SEC when we did our ICO in 2018.
That said, we can interpret US laws and look at specific court rulings on cases similar to that of the NEXO Token and we can make an educated guess as to whether our token would be classified as a security. Nevertheless, something many people don’t know is that once an asset is deemed a security it doesn't necessarily stay that way forever; an asset can be a security and then stop being a security. It can go back and forth.
Although we have transitioned from dividends to daily interest on NEXO Tokens and that may indeed change our token’s status, we are firm about being safe and compliant and won’t launch Earn in NEXO in the US until we are absolutely certain that the NEXO Token will not be considered a security. Fortunately, we are actively working on a solution with our legal team in the US and will update clients as soon as we know more.
When will the NEXO Token be listed on major exchanges such as Binance, Gemini or any other bigger exchanges?
Well, we’re listed on Huobi which is definitely more liquid than Gemini and some other smaller exchanges. As for Binance and other large exchanges, it’s a process, they have a lot of stringent rules which have only increased with the regulatory interest surrounding this exchange. However, the NEXO Token has been very liquid despite not being listed on the exchanges mentioned in this question.
Does Nexo plan on continuing business in the UK? One of your competitors just announced they are stopping all business with new UK customers due to regulations.
Well, the FCA’s statement simply says that they take issue with a specific Binance entity and its derivatives and leverage products. The statement focuses very clearly on this type of complex financial instrument. Another thing to note is that the FCA states they are not regulating crypto – specifically Bitcoin and Ethereum – which means that this announcement does not affect spot trading. Essentially, types of trading activities that do not include leverage should not be affected and the FCA is not regulating crypto. Under these circumstances, I don’t see any issue for Nexo to continue operations in the UK at this time.
Are there any features in Nexo's pipeline, which would help us avoid liquidation during a highly volatile market?
It depends on the level of volatility. Nexo issues price-based margin calls which are the safest way to protect users and the business. This includes liquidations which are necessary to ensure the security of our interest-earning clients’ funds. That said we do not like liquidating clients and we are working on products and features that can help people avoid them. Currently, we’re working on custom products that will be rolled out first to larger clients for testing and then for all users. One of these new functions is a mechanism that caps some of your assets' upside potential but gives you some insurance against short-term volatility and protects your collateral from liquidation.
Another thing we’re working on is a feature that will allow you to free assets from Fixed Term accounts prior to the end of your selected lock-up period against a small penalty fee. This will enable you to release those funds and instantly use them as collateral to avoid liquidations.
Finally, clients should also know about the Collateral Exchange feature we recently introduced. With it, you can protect your collateralized assets against volatility by swapping all or part of them out for stablecoins during volatile times. This would prevent your crypto’s value from dropping below the required amount and protect you from liquidations.
Can you reveal any news, plans, something that will pleasantly surprise us in the next month?
Yes, firstly, the referral program will finally be going live. The community has been talking about how much they want this feature, so now every client will be able to generate some revenue for themselves by bringing their friends to Nexo. It’ll also naturally lead to more clients on the platform. Overall, it’s going to be great. And we’ll also have a feature that allows you to free your assets from Fixed Terms accounts before the lock-up expires against a small fee, so that’s also coming.