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

March has, unfortunately, been a dark month for the world.  Nary an industry remains, that has not felt the effects of COVID-19.  Despite this, there were select events over the past few weeks that brought positivity, as the world of digital securities and blockchain marches forward.  This edition of ‘The Digital’ highlights a few of the interviews we’ve completed over the preceding weeks, in addition to a look at how COVID-19 has influenced the sector.

Partnerships + Upgrades

As an SEC regulated security token issuance platform, high hopes are held for TokenSoft.  Led by a strong team, this Californian company caught our attention on multiple occasions in March.  First, for their noteworthy partnership with ‘Hub Security’. Secondly, they managed to develop and launch an upgraded wallet, in an effort to provide users with an intuitive and flexible experience.

TokenSoft Launches Major Wallet Upgrade

TokenSoft Partners with Ex-Military Cyber Firm ‘Hub Security’

Strategic Investments + Raising Capital

While asset classes, such as real estate, have dominated capital generation events thus far in the digital securities sector, there are an increasing number of ’boutique’ offerings.  March saw two examples of this, as new events surrounding Bourbon and eco-friendly chocolate took the stage.

Investing in Kentucky Bourbon with Wave Financial

The Nu+ Company – Sustainability with Chocolate and Trees

Bank Activity

From around the world, banks are recognizing that, not only are cryptocurrencies not going away, but that they hold real merit.  March saw both, the Reserve Bank of India and The Bank of Canada, take varying stances towards them.  While India’s central bank continues their fight to suppress the technology, Canada appears on the edge of potential adoption, through their own CBDC.

Reserve Bank of India to Petition Supreme Court Ruling on Virtual Currencies

The Bank of Canada Could Issue a Digital Currency in the Future

In The News

The COVID-19 Effect

As the global pandemic known as COVID-19 continues to play out, we took a look at a few of the ways the virus has affected blockchain and digital securities.  From designating essential services, to reallocating mining resources, and the suspension of services – change is afoot.

Vertalo CEO, Dave Hendricks, didn’t mince words when commenting on the recent decision by the DTCC to suspend handling of paper-based certificates.

“It’s time for issuers and investors, especially with respect to private assets, to effect digital transformation and improve the resiliency and response time of securities transactions. Only fully digital transfer agents like Vertalo are capable of this sort of step-function improvement.”  Read Here

 ‘The Runway Fund’ Looks to Provide Relief for Start-Ups Impacted by COVID-19

While difficult times often lead to innovation, and the advent of new technologies, there are many that suffer greatly.  Young companies, not yet fully established, are particularly susceptible.  Thankfully, there are those that have extended a helping hand, through the creation of a new relief fund.

“Whether you were about to close a funding round, or sign your first revenue deal, we know that COVID-19 has caused unanticipated disruptions and delays that may force you to take some tough decisions and maybe even to shut down.

Our goal is to help you through this tough time and to maximize your chances of survival.” Read Here

Interviews

Paolo Ardoino, CTO of Bitfinex and Tether

With the volatility recently seen in basically every market, stablecoins have established themselves as more important than ever.  We were fortunate to have completed this exclusive interview with Paolo Ardoino, CTO of Tether and Bitfinex.  While competition for Tether has grown greatly in the past year, this stablecoin remains one of the world’s most popular.  Their endurance as a popular choice, is no doubt due to constant innovation – such as the potential for future upgrades including the Lightning Network, and more. Read More

Adam Vaziri, CEO of Blockpass

KYC and AML are critical procedures, required to be completed by basically every reputable company.  As such, there is a definite demand for services which facilitate the processes.  Enter Blockpass – A company led by Adam Vaziri, set on specializing in Identity services. Read More

Marko Hafez, President and CEO of Blockstation

This promising Canadian startup has managed to establish various strategic relationships with regulated stock exchanges.  In this exclusive conversation, we speak with Blockstation CEO, Marko Hafez, and learn more about his experience, and how Blockstation found themselves where they are today. Read More

Thought Leaders

HODL Your Hoopla Over SEC Changes for Exempt Offerings

The first, in a pair of contributions by Matthew Unger (Founder of iComply), examines his take on recent proposals put forth by the SEC.  Should we be excited for potential changes to exempt offerings? Or are we getting ahead of ourselves? Read Here

Why EU Blacklisting the Cayman Islands Matters for the STO Industry

In a second contribution, Matthew Unger of iComply, took a closer looks at the recent treatment of Cayman Islands based companies by the EU.  Is the treatment warranted?  How can companies ensure their AML practices are up to snuff? Read Here

Around the Web

South Korea Passes One of the World’s First Comprehensive Cryptocurrency Laws – Techcrunch

While many nations remain undecided on their stance towards cryptocurrencies, South Korea continues to march to the beat of their own drum.  March saw the tech-savvy nation pass new laws pertaining to these virtual assets, potentially providing other nations with a blueprint of feasible approaches.  Read More

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.

Safe Harbor

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.

SEC Commissioner Peirce Releases Token Safe Harbor Proposal – A Time Limited Exemption for Tokens

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

Circle Attempts to Sell SeedInvest, Doubling Down on Stablecoin

Hope Rising

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?

Libra Sees E-Commerce Giant, Shopify, Join the Ranks

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”

Bloomberg Release Financial Plan – Includes Crypto Regulations

Interviews

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

From the ICO boom to the potential of STOs, we sat down with Matthew Unger to learn more about his perspectives and what iComply can offer. Read More

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

Thought Leaders

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