Monthly Update
A Month in Review – December 2019
While December brought various highlights pertaining to digital securities, one that stands out is a recent proposal, put forth by the SEC. The regulatory body has recognized a need to redefine/modernize the definition of what constitutes an accredited investor, and has set out to do just that. Beyond these potential changes, we saw a flurry of activity, involving Japanese companies, becoming increasingly involved in the sector.
This edition of ‘The Digital’ looks at each of these developments, in addition to highlighting a few key articles provided by securities.io during this past month.
Transfer Agents
One of the various designations necessary for the digital securities sector to function, is a Transfer Agent. Whether acting as an intermediary, issuing certificates, or dealing with lost certificates, their role is an important one. December saw multiple companies look to attain this designation.
TokenSoft Subsidiary, DTAC LLC, looks to ‘Join the Party’ as a Transfer Agent
Vertalo Receives SEC Letter of Effectiveness
Raising Capital
As they continue marching forward, Ripple announced during December, that they have achieved a $10 billion valuation. This was made possible through a successful $200 million series C, headlined by Tetragon, SBI Holdings, and Route 66 Ventures.
This announcement came at a time with Ripple still actively dealing with legal battles surrounding the purported illegal sale of securities. Clearly this event has not swayed others’ beliefs in the company, as made evident with their aforementioned valuation.
Ripple Attains $10 Billion Valuation after $200 Million Series C
Japanese Expansion
November saw increased levels of Japanese activity, with December serving to continue this trend. Both, key investments and acquisitions, based in Japan specifically caught our eye.
Huobi Japan Secures $4.6M from Tokai Tokyo
Securitize Increases Ties to Japan through First Acquisition
In The News
A Global Perspective
With the end of December marking not only the end of the year, but the decade, we thought it a perfect time to gauge industry sentiment. The following articles represent a short series, in which we provided a questionnaire to CEOs from companies surrounding the world.
Through these insights, it is clear that, while there is work to be done, there is positivity abound with, both, a 2 and 5 year perspective – regardless of location.
Julian Kwan, CEO of InvestaX, and one of the participants in this series, summed up their expectations for the sector in the coming years.
“In 2 years many institutions will have issued their first digital security, in 5 years there will be no new company set up in paper form anymore and every security offering will be digital as smart governments migrate company set up and management to distributed ledgers removing the need for any paper.”
Interviews
Derek Schloss, Director of Strategy for Security Token Academy
After a recent contribution to our ‘Thought Leaders’ series, by Derek, we thought it prudent to learn more about, both, himself and Security Token Academy. This discussion does just that, in addition to touching on the subtleties behind the various forms of crowdfunding. Read More
Oliver Siah, CEO of Fraxtor Capital
In this exclusive interview, we learn about, not only Fraxtor and real estate, but Oliver himself. From acting as a seasoned Singaporean Air Force Officer, to investing in real estate, Oliver possessed a unique and diverse background, sure to help in the success of Fraxtor. Read More
Christian Platzer, Managing Partner of Black Manta Capital
From the rationality behind the Black Manta name, to their relationships with various European entities, this interview sheds light on it all. Check it out to learn a bit more about this young company. Read More
Education
Under Scrutiny: How to Pass Due Diligence as a Blockchain Project
Our latest entry into our ‘Thought Leaders’ series, sees repeat contributor, Gene Deyev, elaborate on what due diligence entails. From Legal, Technical, and Business considerations, the process may be more in-depth than many realize. Read Here
Around the Web
SEC Proposes to Update Accredited Investor Definition to Increase Access to Investments – Securities and Exchange Commission
With the ongoing development of next-gen technologies, many have called for an update to antiquated industry definitions; an update which better reflects current markets and their participants.
This call was heard, as the SEC announced a proposal put forth which would greatly change who we deem an accredited investor. In doing so, digital securities may soon see a new crop of investors gain access to the sector. Read More
June provided us with a steady stream of developments, surrounding the digital securities sector. We saw new regulations, new platforms and services, and the demise of various others.
Regulatory Advances and Findings
Multiple regulatory bodies made news in June. This was first evident with the anticipated release of findings by the OSC, pertaining to the QuadrigaCX fiasco. South of the border, the SEC was no stranger to making waves. Not only did the Supreme Court weigh in on SEC capabilities, but news broke of the possible exodus of Chairman, Jay Clayton.
OSC Finds Extensive Evidence of Fraud/Theft by Gerald Cotten and QuadrigaCX
Supreme Court Reins in SEC on Disgorgement
SEC Chairman, Jay Clayton, Moving On?
Pivots and Bankruptcies
Blockchain and digital securities are both in their infancy. As such, companies developing services around each are still finding their footing. This was on full display throughout June, as multiple companies announced either their imminent closure, or a pivoting focus.
Neufund Freezes Operations of Issuance Platform
SeedCX Refocuses Efforts on Settlement Service ‘Zero Hash’
Factom Inc. Files for Chapter 11 Bankruptcy in Bid to Survive
Real Estate
DeFi continues to convince many that it is the first ‘killer app’ surrounding cryptocurrencies. Various companies involved with digital securities are trying to emulate this success, and find the perfect implementation for the technology. A few of these companies are banking on real estate being the perfect avenue for achieving this.
For examples of this, look no further than the recent actions of companies like Vertalo, Tokensoft, and Tokai Tokyo.
Investment Activity in Japan Signals Interest in Digital Securitization
In The News
SeedInvest Makes the Best of a Bad Situation
We have touched on the effects of COVID-19 various times since the beginning of the pandemic. While many have been hit hard by its effects, there are those that have made the best of a bad situation. A prime example of this is the recent successes of crowdfunding platform SeedInvest.
“Unlike venture capital firms, online fundraising platforms are perfectly situated to help startups in the current, post-COVID-19 world we are in. Online fundraising platforms are not dependent on capital from a handful of pensions and endowments, but rather a large, diverse network of investors (SeedInvest has had over 350,000 investors register for example).” – Ryan Feit, CEO of SeedInvest
Thought Leaders
Solving the Liquidity Puzzle for Security Tokens
Borys Pikalov, Head of Business Analytics at STOBox, took the time to pen his thoughts on what it will take for security tokens to realize their potential liquidity. This insightful article elaborates on, not only what constitutes a security token, but why they are important, and how true liquidity can be achieved.
Interviews
Hirander Misra, Chairman of GMEX Group & SECDX
In this exclusive interview, we learn about the bevy of services on offer from each, GMEX Group and SECDX. Whether discussing custodial services, or strategic investments, Hirander Misra sheds light on why, and how, each company is affecting change. Read More
Around the Web
Nasdaq’s New PLatform Backed by R3, Digital Asset, Symbiont and Microsoft May Not Be What Your Think It – Forbes
To date, much of development behind blockchain and digital securities has been achieved by smaller, flexible companies. This is changing with time, though, as we are now seeing adoption among more established companies. Forbes recently touched on this, and the various benefits behind tokenization, which have captivated the imaginations of companies like Microsoft. Read More
While operations are far from returning to the norm, May was the first month, since the onset of COVID-19, to really demonstrate a positive turn of events. Many nations have seen cases peak, or even decline, at this point.
While the threat of COVID-19 appears to be diminishing, due to huge efforts made around the world, the lessons learned from the pandemic are as fresh as ever. This was evident over the month of May, as many developments surrounding blockchain involved projects influenced by the pandemic. One such example is a recognition by governments that CBDCs are, indeed, something needed moving forward.
This edition of ‘The Digital’ highlights a few examples of this, along with a few industry developments seen throughout May.
Regulatory Advances
Growth surrounding digital securities has long been stymied by a lack of regulatory clarity. This, however, is fast becoming an argument of the past. This month alone, we saw nations stretching from the Caribbean to Asia, doing their part to facilitate sector growth.
RBI Clarifies Crypto Banking Regulations in India
Taiwan Publishes New Security Token Regulations
New Framework Passes in Cayman Islands Addressing Virtual Assets
Central Bank Digital Currencies (CBDC)
With inefficiencies brought to light by COVID-19, nations around the globe are working to upgrade their operations, with the release of a CBDC. May saw multiple examples of this in, both, France and Austria.
France’s Central Bank completes Security Issuance with Digital Euros
Raiffeisen Bank Cooperating with Billion in Pilot of CBDC
Libra
Due to being a product of Facebook, the Libra project has, understandably, garnered the attention of a massive audience. While the road has been bumpy, on route to where they stand now, this has not prevented progress from being made on the project.
Where April saw multiple additions to the Libra Association, May brought the announcement of the project’s first CEO being appointed. In addition to this, Calibra underwent a re-branding, and is now known as ‘Novi’.
Facebook’s Libra Wallet, Calibra, Rebrands to ‘Novi Financial’
Libra Project Appoints First CEO – Stuart Levey
In The News
TON Project Shutters its Doors as the SEC Prevails
After waging a months-long battle against the SEC, Telegram made the decision to throw in the towel. In the process of doing so, Telegram CEO, Pavel Durov released a condemning perspective of the United States. Read Here
“…we, the people outside the US, can vote for our presidents and elect our parliaments, but we are still dependent on the United States when it comes to finance and technology (luckily not coffee). The US can use its control over the dollar and the global financial system to shut down any bank or bank account in the world. It can use its control over Apple and Google to remove apps from the App Store and Google Play.
So yes, it is true that other countries do not have full sovereignty over what to allow on their territory. Unfortunately, we – the 96% of the world’s population living elsewhere – are dependent on decision makers elected by the 4% living in the US.”– Pavel Durov, CEO of Telegram
DTCC Unveils Two Security Token Research Platforms
After experiencing multiple shutdowns, due to COVID-19, it was made apparent to the DTCC that a change to their operations was needed. May saw this realization result in the DTCC announcing multiple programs, built to study the efficacy of blockchain, in settlement process. Read Here
“The private markets are ripe for increased levels of automation and lack much of the infrastructure that has supported the public markets for decades…Project Whitney presents an exciting opportunity to leverage emerging technologies and develop completely new solutions from the ground up.” – Jennifer Peve, Managing Director at the DTCC
Interviews
Andrew Adcock, CEO of Crowd for Angels
In this exclusive interview, we discussed the benefits made possible through equity crowdfunding. Further to this, Andrew elaborated on what Crowd for Angels is doing to push the sector forward. Read More
Around the Web
Why Central Bank Digital Currencies are Good News for Blockchain Adoption – Forbes
As nations continue toying with the idea of a CBDC, Forbes touched on a future in which these assets stand to help the adoption of blockchain. While some believe CBDCs will eliminate a need for assets, such as Bitcoin, there are various reasons why they may just help it instead. Can such assets co-exist? Read More
As the world continues to make progress in the fight against COVID-19, the appeal of digital securities continues to grow. This is, in great part, due to a diminishment of VC activity being seen, resulting in an increased interest in alternative means of capital generation.
This edition of ‘The Digital’ highlights a few examples of this, along with a few illuminating interviews, completed throughout April.
Secondary Markets
One of the more commonly anticipated benefits associated with digital securities is the advent of secondary markets, due to the liquidity which they will, potentially, provide.
April ended as a mixed bag, with regards to secondary markets. While leading U.S. platform, OFN, struggles with their financials, Canadian based, TokenGX, was given the greenlight for their next endeavour.
TokenGX Gets Greenlight to Develop Secondary Trading Platform for Canadian Markets
OpenFinance Network ‘OFN’, to De-List Assets Unless Issuers Step-Up
Strategic Investments + Raising Capital
As consumer bases becoming increasingly educated, companies with a focus on social impact investing will see their appeal grow. EFFV has recognized this, and announced an upcoming STO, structured to fuel their growth in ‘green’ endeavours.
Along with this, April saw tZERO successfully land a $5 million investment. The company indicates plans to use this funding for the expansion of services within Asia.
tZERO Secures $5M to Expand Asian Operations
Earth First Food Ventures (EFFV) – Social Impact Investing within FoodTech
Stablecoins
One of the hottest forms of digital assets is, without a doubt, Stablecoins. These assets have garnered the attention of many, to the point that Facebook is developing their very own variant. This past month saw development, not only surrounding Libra, but insights provided from, both, politicians and researchers.
California Berkeley Haas Blockchain Initiative Researchers Issue New Stablecoin Study
Yet to be Quenched, Libra Still Being Forged through Criticisms and Growth
In The News
Playing in the ‘Tokenization Sandbox’ with Vertalo
With the digital securities sector being multiple years old, at this point, the time has come for companies to begin pushing for real adoption. Vertalo has recognized this, and recently announced multiple efforts to do just that. The most recent of which is the launch of, what they call, a ‘Tokenization Sandbox’.
Vertalo CEO, Dave Hendricks, spoke on the purpose of their Tokenization Sandbox, and why it is needed.
“The Vertalo Sandbox Program is an innovation that is designed to reduce obstacles to digital asset transformation and to empower market participants…In order to create confidence in the digital transformation programs, we need to move past expensive services for commodity transactions such as token issuance.” Read Here
Mr. Wonderful Aligns Efforts with Equity Crowdfunding Platform, ‘StartEngine‘
Determined to continue growing, and provide their clientele with unmatched opportunities, StartEngine was successful in attracting new talent to their team, this past month. Joining the team is none other than Kevin O’Leary, aka Mr. Wonderful.
Kevin O’Leary spoke on why he decided to make the jump into crowdfunding with StartEngine.
“With the coronavirus pandemic causing economic uncertainty, startups and small businesses are having an incredibly hard time accessing capital, so you’re going to see a material increase in interest in crowdfunding companies like StartEngine that are solving that problem…We’re going to look back on this period as the start of the rise of equity crowdfunding, and I think it’s an industry that StartEngine is going to win.” Read Here
Interviews
Jim Dowd, Founder & Managing Director of North Capital Private Securities
In this exclusive interview, we discussed the recent launch of a new ATS, supporting a variety of assets, including digital securities. This development marks an important step forward, at a pivotal time, when investors are looking for such services. Read More
Nick Bhargava, Cofounder of GROUNDFLOOR
As the cofounder of real-estate focused crowdfunding platform, GROUNDFLOOR, Nick Bhargava has unique insights into the JOBs Act. In this discussion, we highlight industry needs, moving forward, as well as what GROUNDFLOOR has to offer. Read More
Benjamin Tsai, President & Managing Partner of Wave Financial
Between their upcoming ‘Kentucky Whiskey Fund’, and their investments in companies like Securitize and Vertalo, Wave Financial is clearly ‘all-in’ on digital securities. Peruse our discussion with Ben Tsai, as he elaborates on why this is. Read More
Around the Web
Instant Access: Easy, Secure and Compliant Peer-to-Peer Transactions of Digital Securities – Securitize
With many digital security focused exchanges still working to get off the ground, Securitize has developed, and launched, a new means of buying/selling these assets. This capability comes through the use of technologies such as ‘Atomic Swaps’, eliminating the need for third party facilitators. Read More