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Crowd for Angels Lists First STO Backed by Sports Sponsorship Assets

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Crowd for Angels Lists First STO Backed by Sports Sponsorship Assets

Crowd for Angels, a London-based crowdfunding platform, recently listed the first STO backed by sports sponsorship assets. The security token issuer, Sports Investor Coin, claims that most of the funds raised via the sale of its tokens will be used to purchase sports sponsorship assets, thus creating token value for investors and providing sports organizations with liquidity borrowed against future sales of their brand assets.

Crowd for Angels Lists First STO Backed by Sports Sponsorship Assets

Sports Investor Coin’s “pitch” on Crowd for Angels

Sports sponsorship assets are used to promote other businesses and their brands. Examples of these assets include the decal space on a race car, the naming rights to a stadium, and team partnership agreements (e.g. ‘official sports drink’).

Sports Investor Coin tokens will be sold through existing sports sponsorship asset networks at first, and through token exchanges later. A percentage of profits will be returned to token holders as dividends issued via smart contracts.

A regulated platform for selling equity, debt, and tokens

Crowd for Angels funded its own launch via a March 2018 ICO to become the UK’s first regulated crowdfunding platform for both private and public companies selling equity, debt, and crypto tokens. Crowd for Angels is authorized and regulated by the UK’s Financial Conduct Authority (FCA). Companies looking to raise capital can create, build, and manage what is termed a “pitch” on the CrowdForAngels.com website.

Investments are made and capital is raised by way of the sale of equity shares, debt bonds, and crypto tokens.

Equity pitches

Most share sales on Crowd for Angels offer generous tax deduction benefits provided by the government to help high-risk, early-stage companies raise equity finance. Crowd for Angels does the paperwork to ensure investors can claim the full amount of tax deductions allowed by law.

Debt pitches

Founders selling bonds on Crowd for Angels maintain full ownership of their company. A simple obligation to repay the money borrowed is created according to agreed terms, after which the relationship with the lenders ends. Lenders enjoy high interest rates, while founders benefit from easy to forecast expensing on loan payments that do not fluctuate.

Bonds sold on Crowd for Angels are “high-yield” debt securities issued by companies with no credit rating. Though the convertible loan notes are secured against company assets, this does not guarantee repayment of interest or principal. Bonds listed for sale on Crowd for Angels also carry an illiquidity premium because there is no right to early cash-in as there is no secondary market on which to sell them.

Token sale pitches

Crowd for Angels enables founders and investors to participate in an ICO on a UK-regulated crowdfunding platform. Startups can try to jumpstart and scale their project while paying fees only if their ICO is successful.

How to invest

Individuals and institutions must first register and be authorized as investors on Crowd for Angels. They can then browse pitches, click the pitch summary box to see the minimum and maximum funding targets, the funds raised to date, the pitch’s remaining days, company financials, and team bios.

With equity pitches, the investor can view share price, the number of shares offered, and tax relief eligibility. With debt pitches, investors can view the interest rate, conversion date (repayment schedule), and term.

Once an investor chooses a product, they click “Invest in this pitch” and link a bank account. This procedure acts as only a commitment until the pitch reaches its minimum target.

Investors use their Crowd for Angels dashboard to follow company updates, ask questions of the company and fellow investors on the pitch’s discussion board, and gain private access to the company once fundraising is complete. Investors can monitor their investment performance through the “My Portfolio” tab on their dashboard, including conversion, dividends, and interest payments notices.

How to list

Creating a pitch on Crowd for Angels is a fully online process with no upfront fees. The company creating the pitch fills out an application form with company details, the desired raise amount or range, and details on how the funds will be used. Crowd for Angels reviews the application and replies within two business days.

An approved company the writes the pitch, embeds a video, adds team bios, and uploads investors documents. Once a pitch reaches its target raise, Crowd for Angels creates the subscription agreement and then collects and delivers the funds.

The future

Crowd for Angels has so far raised several million euros for pitch companies with a combination of equity and debt offerings. It now aims to leverage its regulated status to offer tokenized shares and bonds as a UK-sanctioned STO platform.

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Jay Derenthal is a leading cryptocurrency and blockchain writer. He has extensive business development and growth hacking experience, with a particular interest in the tokenization of assets into tradable securities. Jay uses market research to align his reporting with the most exciting trends in the fast-evolving security token news arena.

Security Tokens

RBI Clarifies Crypto Banking Regulations in India

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RBI Clarifies Crypto Banking Regulations in India

This month, the Reserve Bank of India (RBI) clarified its stance on banks seeking to provide services to crypto customers. The clarification comes nearly a month after the supreme court ruled that cryptocurrencies trading is not illegal in the country. The news demonstrates a growing demand for decentralized currencies in India, as well as, a desire by regulators to remain relevant in the digital economy.

No Laws Prohibiting Banks

According to a statement by RBI executives, there are no laws prohibiting banks from offering banking services to crypto-related business clients. The statement comes after a public outcry from the cryptocommunity. Many voiced concerns over banks denying them service on the grounds of RBI’s previous statement. Now, the market has clarification. As such, crypto service providers and traders can now rest easy knowing that they have the same rights as other businesses in the country.

Further research reveals that statement was a direct response to a query filed by the co-founder of the cryptocurrency exchange Unocoin, BV Harish. BV Harish utilized the country’s Right to Information (RTI) Act to force the bank’s statement. Importantly, the official filing took place back on April 25. However, SBI took nearly a month to make the news public.

Clarify RBI Stance

Importantly, the statement follows a supreme court ruling last month on the use of cryptocurrencies in the country. The ruling made it clear that crypto exchanges and traders have a place in India. Discussing the ruling, Nischal Shetty, founder, and CEO of Mumbai-based cryptocurrency exchange WazirX explained why the market needed some clarification on RBI’s stance. He welcomed the decision. He also pointed out that RBI had been silent on the matter until forced to comment via the filing.

Right to Information (RTI) Filing Against RBI

Right to Information (RTI) Filing Against RBI

Despite the positive response from investors, central bankers were quick to chastise the decision. Not surprisingly, RBI Bank executives even planned to file a review petition against the decision. Like most central banking authorities, they believe that cryptocurrencies pose a direct threat to the stability of the market. Notably, the group hasn’t filed any reviews as of yet.

India Continues on its Decentralization – RBI

India continues to embrace blockchain technology on all levels. This vibrant nation has an active crypto community. They have fought long and hard for their right to a free crypto market. Over the last few years, the country has been embroiled in internal debates regarding the legality of these unique financial instruments.

Cryptocurrency Hub

Importantly, since the supreme court’s ruling, crypto activity in the country has seen a gradual uptick. Specifically, local exchanges across the nation reported major upticks in trading activity. Even with all the positive growth, it could be months before India regains its spot as the crypto epicenter in the region. Hopefully, the new ruling provides investors with the transparency needed to push expansion in the Indian crypto markets further than ever before. For now, many in the country can breathe a sigh of relief knowing that their decentralized investment strategies are still safe.

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Security Token Group Study Reveals Investors Hedging US Markets with Security Tokens

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Security Token Group - US Equities

This month, a research team from the Security Token Group delved into how security token holders faired against US equity investors. Interestingly, the report revealed a decoupling of the STO market from the US equities markets. As such, researchers demonstrated how investors can use security tokens to hedge against US equity markets during the Coronavirus pandemic.

Uncorrelated Assets – Security Token Group

The report begins with a eureka statement from researchers. Nicely, the Security Token Group takes a moment to let you know there’s some light at the end of the Covid-19 tunnel. Here, they explain the fruits of their research. Also, the main researcher, Jonah Schulman shares a heartfelt message when he states “have faith and remain positive during these hard times.”

Security Token Group Info Graphics

Security Token Market InfoGraphics

The study includes a comparison of two hypothetical investors from the start of 2020. Importantly, the first investor has $1 million in US equities in their portfolio. The second investor holds only $750,000 in US equities and the remaining $250,000 is held in a diversified security token. The Security Token Group chose to distribute the funds evenly over the top 14 security tokens in the market.

Top Security Tokens

 

  • Protos
  • Mt Pelerin
  • Lottery
  • Lesure St, Detroit, MI
  • Audubon Rd, Detroit, MI
  • Fullerton Ave, Detroit, MI
  • Marlowe St, Detroit, MI
  • Appoline St, Detroit, MI
  • Patton St, Detroit, MI
  • tZERO
  • Startupbootcamp
  • SPiCE VC
  • Blockchain Capital

 

The results from the report were an eye-opener. Researchers showed that the second investor outperformed the first by over 3%. Specifically, both investors took losses, but investor 2 was able to weather the storm better. The data showed investor one lost -9.50%, while investor 2 showed a return of -6.54%. In total, investor 2 held on to an additional $31,625 thanks to their security token investments.

Notably, Protos showed the most gains over 2020. The token is up 27% to date. Reversely, the worst performer in the portfolio was Blockchain Capital. This token showed a -10.03% loss over 2020. The report then breaks down the aggregate return for the total portfolio since the start of the year.

The data showed a +2.35 return. Importantly, researchers pointed out that an investor that followed this strategy would be up 12% versus investors that only held equities. Crucially, the data signals that if you were invested in the Dow Jones, S&P 500, and the NASDAQ exclusively for 2020, you may want to expand your horizons.

Security Token Group – Delving Deep

As part of this strategy, the group decided to calculate the correlation coefficient for all of the security tokens in the study. When you calculate a correlation number you examine varying factors and market movements to notice patterns. The higher the score, the more correlation you have between two financial instruments.

Security Token Group Coefficient

Security Token Group Coefficient

Amazingly, the security tokens correlation coefficient score was only -.19. To put this score in perspective, the report lists Apple stock as .88. Interestingly, researchers then show the data for each token independently. This data helps to indicate what security tokens unhinged from the US markets during the epidemic specifically.

The next step was to examine each tokens correlation to each of the major US markets independently. Interestingly, the largest security token in terms of market capital, tZERO showed the highest correlation among the tokens. SPecifically, tZERO ranked .74. The other tokens in the study scored much lower. For example, all of RealT’s tokenized properties scored just .21.

An Escape Pod

The Security Token Group’s research proves what blockchain-based financial instruments continue to make headway in the market. Notably, STG researchers plan to conduct further studies in the coming weeks to better understand the effect of these tokens in the sector. For now, savvy investors continue on their hunt for uncorrelated assets during the quarantine.

 

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DTCC Unveils Two Security Token Research Platforms

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DTCC Unveils Two Security Token Research Platforms

This week, the security token sector got a jolt of energy after the Depository Trust & Clearing Corporation (DTCC) unveiled two new blockchain programs. The programs are meant to study distributed ledger technology (DLT) and how it can improve the current settlement processes. The news marks a turning point in blockchain integration as the DTCC processes quadrillions worth of securities transactions yearly.

DTCC Projects Underway

According to reports, DTCC has two DLT initiatives already in the works. The two projects, Ion and Whitney, leverage blockchain technology to improve upon the current business models. For example,  Ion is a proof-of-concept alternative settlement service. The platform will work as a stress test indicator to verify the scalability of blockchain settlement systems under heavy traffic. The protocol is the result of years of research. In 2018, the public got a glimpse into the project as DTCC announced the results of a benchmark study. The report demonstrated for the first time that DLT is capable of supporting average daily trading volumes in the US equity market.

Ion

Ion is the DTCC’s new blockchain settlement protocol. Impressively, the platform is said to be able to handle quadrillions of transactions. Interestingly, Ion developers ran this concept for 12 weeks with mixed reviews. For example, in their report developers acknowledged scaling issues that emerge during development. Despite some bugs, the proof-of-concept served its purpose as a benchmark tester for DLT tech. Importantly, the platform utilized the Ethereum network. This decision makes sense as Ethereum is known for its developer-friendly ecosystem.

Jennifer Peve - Managing Director of Business Innovation at DTCC

Jennifer Peve – Managing Director of Business Innovation at DTCC

Ion is now moving on to the next stage in its development. DTCC executives are now on the lookout for a “technical stack” to bring the platform to life. Additionally, the DTCC already offered to start testing APIs of other firms within the ecosystem. This decision is sure to help bolster the security token sector as more developers make the leap into distributed applications (Dapps).

Whitney

The second platform the DTCC plans to examine is Whitney. This private securities market’s design is a combination of features from the private and public securities markets. Developers hope to bring more traditional investment firms to the STO sector with this maneuver.

Importantly, Whitney is a full security token ecosystem. The platform supports the issuance, distribution, and exchange of securities on the blockchain. Consequently, smart contracts integrated with compliance mechanisms are built throughout the protocol. Notably, the DTCC stated it will also keep records of every transaction stored off the blockchain as a security measure. While this decision seems redundant, it does reveal the level of caution the firm plans to exercise.

DTCC Backup

In a public interview, the managing director of business Innovation at DTCC, Jennifer Peve discussed the main goals of the projects. She started with an explanation of how the private securities markets lack transparency. Importantly, Reg D securities have far fewer regulations than publicly traded securities. She explained the DTCC plans to use the data gained from the platforms to build a next-generation securities clearing system.

The Time is Now

Peve, like many in the market, believes the time is ideal to leverage emerging technologies. Its true, blockchain provides intuitive minds a gateway to develop completely new solutions to many of the inefficiencies plaguing the market. For now, it’s exciting to hear a securities powerhouse such as the Depository Trust & Clearing Corporation (DTCC) already has plans to upgrade their systems in the near future.

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