The alternate currency exchange, Cryptsy, has announced today that they are releasing 100,000 non-dilutable fee shares for a price of 0.05 BTC per share at IPO via CryptoStocks. These shares allow the holder to a portion of the dividends obtained from fees incurred by users at Cryptsy. Each share accounts for approx. 0.0002% of the total amount of fees collected.

Cryptsy is offering these share in order to comply with US regulations and obtain the required licenses to be able to offer fiat exchange as part of their service. They claim this process will require approx $1M in capital.

Cryptsy claims they are currently collecting more than 100 BTC per month in fees and estimate a 10-20 time increase as soon as they implement fiat exchange. Cryptsy is currently home to over 13,000 users with 3,500 of them currently in the US. Below is the official announcement of the shares as listed at CryptoStocks.com

Cryptsy offers shares of the Cryptsy exchange trading fees.

Cryptsy will offer 100,000 non-dilutable fee shares for a price of 0.05 BTC per share at IPO.

Each share represents 0.0002% of the trade fees collected. For example, if Cryptsy collects 100 BTC in trade revenue, each share would receive 0.0002 BTC.

Dividends will automatically appear in shareholders’ BitCoin wallets every Friday around 15:00 GMT.

Why is Cryptsy Raising These Funds?

We are seeking capitol to help us fulfill regulatory compliance and file licenses in all the US States which require us to be registered as an MSB. It is estimated that this process will require around $1M in capital. Fulfilling these requirements will allow us to offer Fiat Currency on our exchange. We currently only trade in Crypto-Currency to Crypto-Currency pairs.

What does the future hold for Cryptsy?

Offering Fiat in our exchange will rapidly increase our trading fee income, which would also be passed along to the shareholders.

We currently are collecting in fees over 100 BTC per month. We estimate that by bringing Fiat currency to the exchange we will increase our revenue by 10-20 fold almost instantly (within 90 days to allow for licensing). This equates to fee income of 1000 to 2000 BTC per month within 90 days and increasing as more users migrate from other services. At 2000 BTC monthly income, each share would receive 0.004 BTC per month – which would give a full return on investment within 1 year.

We currently have over 13,000 users, and over 3,500 users in the United States. A very large portion of our user base has expressed that we would be their exclusive exchange once we begin offering Fiat currency exchange.

Is this offering required by Cryptsy to get Fiat Currency listed?

No. This will just speed up the process. We are already in the process of our first state application (Florida). We expect to be licensed in Florida within 30-90 days. There is an enormous amount of paperwork involved in the process. Here are some of the things we are doing now:

Register with FinCEN (Done)

Create a company AML program (Done – currently being reviewed by legal)

Open an MSB bank account. These are special bank accounts required for companies engaging in MSB activity. (In Process – Expected to be done within 30 days)

Have our financials audited by a 3rd party CPA (In process)

Meet minimum network requirements for state licensing (We currently meet this minimum for most states. There are a small number of states, such as California, that require a $500k minimum network – which have not yet met)

File application in first state (Florida) – We are currently waiting on audited financials and final draft of the AML program before filing.

Once we have been approved in Florida, it will then be easier for us to follow with filing in the other states that require it. I believe in all there are 43 states that require licensing. If we raise enough capital, then we will be able to file all states concurrently.

Is Cryptsy seeking other methods of funding?

Yes. We are also looking at more traditional methods of funding from private individuals and firms. We are not, however, looking at making any “shark tank” type of deals.

Will Cryptsy ever perform any kind of buy-back program?

It is very likely that 6 months to 1 year down the road we will buy back some shares in order to increase our retained earnings. This will only apply to those shareholders who actually wish to sell.

Where is Cryptsy located?

We are located in Delray Beach, Florida, USA. See our “About Us” page on our website for our physical address.

How do I know if Cryptsy is paying out the correct dividends?

Our API can provide you with trade activity. You can use this information to calculate for yourself what the collected trade fees where if you are in doubt.

Why didn’t you list “Fee Shares” on your own exchange as some other sites have?

Because we are located in the US, we must comply with US laws. Offering a securities exchange on our website would place us under SEC rules, and that is just not something we want to deal with right now.