Now that we are firmly entrenched in 2020, we are beginning to see companies follow through on their plans for the new year. The month of February brought us news of various high-profile acquisitions, in addition to developments pertaining to, both, Facebook and the U.S. Presidential race.
This edition of ‘The Digital’ looks to shed light on a few key developments, as well as highlight a series of informative interviews – headlined by SEC Commissioner, Hester Peirce.
With the SEC taking a firm stance towards companies issuing what could, potentially, be deemed securities, industry participants were excited when Commissioner Peirce put forth a unique proposal. This time-limited exemption would allow for new interpretations, on which assets become subject to SEC regulation.
Sales and Acquisitions
Digital securities are not for everyone. This was made clear in February, as a pair of companies underwent big moves. However, for every seller, there must be a buyer. While Circle continues to sell off their various branches of operation, BitGo made a large splash by acquiring tokenization platform, Harbor.
BitGo Works Towards ‘Full-Stack Solution’ with Harbor Acquisition
A hot start for Facebook’s ‘Libra’, saw the endeavour backed by various high-profile companies. While regulatory pressure resulted in these companies leaving the founding group, the tides may have shifted, yet again.
This shift may be spurred on by news of Shopify joining the Libra project. Will more companies follow suit?
In The News
A Candidate’s Plan
The Presidential Race is heating up, with a few key front runners. One of these fitting the bill is Mike Bloomberg. As such, we should pay attention to the promises being made by his platform, as they may soon represent the goals of a nation.
In their pitch, the Bloomberg platform directly addresses the lack of clear framework surrounding digital assets, and the need for change.
“Mike will promote healthy competition in financial services by creating a “regulatory sandbox” where startups can test concepts, and by providing a clear regulatory framework for cryptocurrencies.”
Delving deeper, the platform notes,
“Cryptocurrencies have become an asset class worth hundreds of billions of dollars, yet regulatory oversight remains fragmented and undeveloped. For all the promise of the blockchain, Bitcoin and initial coin offerings, there’s also plenty of hype, fraud and criminal activity. Mike will work with regulators to provide clearer rules of the game by:
- Clarifying responsibility for overseeing cryptocurrencies.
- Providing a framework for initial coin offerings, by defining when tokens are and are not securities.
- Protecting consumers from cryptocurrency-related fraud.
- Clarifying how investments in cryptocurrencies will be taxed.
- Defining capital and other requirements for financial institutions holding cryptocurrencies”
Hester Peirce, Commissioner at the SEC
We were fortunate to have completed this interview with the popular SEC Commissioner, Hester Peirce. In this interview, we learn more about Commissioner Peirce’s views on issues plaguing the digital securities sector, and what companies can do to avoid them. Read More
“I think we are trying to come to a place where we can make it easier for people who are trying to do the right thing to do it in a way that is compliant with our rules that also achieves their objectives, that’s the place that I want to get to. It will never be particularly simple because our securities laws can be really difficult, but we can certainly make it easier than it is now.”
Matthew Unger, CEO of iComply Investor Services
Matthew Le Merle, Co-Founder & Managing Partner of Fifth Era, and Keiretsu Capital
With decades of experience investing in start-ups, Matthew Le Merle has a wealth of knowledge to share. He does just that in our February conversation surrounding digital securities. Read More
Regulated Digital Assets Take Over in 2020
Aaron Kaplan, Co-CEO of Prometheum, took the time to share his thoughts on the state of digital securities in 2020. Here we learn what the industry possibly has to look forward to, with regards to government regulations and more. Read Here
Around the Web
Malta Financial Services Authority – Feedback Statement to the Consultation Document on Security Token Offering
With a self-professed goal of becoming a ‘blockchain island’, Malta has taken some important steps forward. February saw the MFSA release a summary of their feedback period surrounding potential framework and regulations to be imposed upon the burgeoning sector. Read More
A Month in Review – June 2020
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.
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.
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.
In The News
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
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.
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
A Month in Review – May 2020
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.
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.
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.
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’.
In The News
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
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
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
A Month in Review – April 2020
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.
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.
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.
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.
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
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