Security Token News
DTCC Releases Security Token Principles Paper
Crypto advocates interests were sparked this week after the Depository Trust & Clearing Corporation (DTCC) released a whitepaper describing fair security token business practices. The whitepaper primarily focuses on post-trade concerns. The release of this document highlights the growing interests of investors in tokenized securities.
The paper lays out a concise market infrastructure in which security tokens must operate within the same rules as traditional securities. While security tokens are subject to the same regulations up to the initial trade, post-trade regulations are lax and in many instances, non-existent. The DTCC wants all players in the arena to operate in the same manner.
DTCC via Bizjournals
The DTCC proposes an identifiable governance structure to institute these regulations. The paper lays out seven areas of concern which the firm believes are critical in protecting investors and facilitating market growth.
- Demonstrable Legal Basis – All distributed ledger platforms must have clear and concise guidelines surrounding any financial products offered.
- Identifiable Governance Structure – Platforms offering security tokens must have appropriate governance support systems in place. These systems provide risk management.
- Identifiable Procedures and Systems to Ensure Settlement Finality – All security tokens are required to provide clear settlement of all transactions.
- Security Token Issuance, Custody, and Asset Servicing – Security tokens should have safety control measures in place to mitigate the chance of loss. These measures should include internal controls and robust accounting practices.
- Resilience – All security tokens must prove that they can operate securely in the marketplace.
- Required Record Keeping – All security token platforms must be able to secure their client’s information. Additionally, this information needs to be available to regulators upon request.
DTCC
The DTCC is a US-based firm that provides financial markets with clearing and settlement services. Originally, the DTCC’s task involved updating the aging securities token processes in use during the 1970s and prior. During these times brokers hand to physically exchange certificates. As you could imagine the process was expensive and time-consuming. Today, the DTCC performs securities exchanges on behalf of investors. The firm is a central securities depositary that provides custodial services to the global financial markets.
Market Power
As the central securities depository, the company holds incredible sway in the market. To give you an idea of just how large the firm is, in 2011 DTCC settled $1.7 quadrillion in transactions in the US alone. The company works with regulators from across the globe to help quell security concerns in the market.
Today, the DTCC works with lawmakers, regulators, and key stakeholders in the US, Asia, Australia, and Europe. The company is an advocate for sound public policy. In the past, the DTCC collaborated on both national and local financial regulations.
DTCC and Global Regulations
You can expect that these latest recommendations influence the future regulations of many nations moving forward. Consequently, these guidelines could create momentum for global security token regulations in the near future. For now, many governments are still clueless on how to handle the digitization of the economy.
This week has seen some dramatic events take place in the blockchain real estate sector. Notably, AssetBlock announced the tokenization of $60 million in real estate funds. The news demonstrates the further expansion of blockchain technology into the traditional real estate market, and AssetBlock’s desire to become a major player in the sector.
News first broke of the tokenization on September 17 via a BusinessWire press release. In the post, AssetBlock sheds some light on the strategies in place and how the company plans to disrupt the traditional markets.
AssetBlock Utilizes Algorand Blockchain
Uniquely, AssetBlock chose to tokenize the properties on the Proof-of-Stake blockchain – Algorand. The Algorand blockchain brings some interesting benefits to the table including compliance, global reach, and a strong team of experienced experts.
As such, the Algorand blockchain is built to be sustainable and governed by open operating standards. Another important point worth mentioning is that Algorand blocks finalize in seconds. In essence, this strategy makes it possible for investor participation globally and instantly.
Proof-of-Stake
As a Proof-of-Stake blockchain, the energy consumption is far less than a Proof-of-Work (PoW) blockchain such as Bitcoin. Algorand uses a proprietary version of PoS dubbed Pure Proof of Stake (PPoS). This protocol provides full participation while leaving users protected at all times. The system is able to achieve consensus without the need for a central authority making truly decentralized.
AssetBlock via Homepage
Lodging Capital Partners LCP
To make this advantageous maneuver, AssetBlock enlisted Lodging Capital Partners (LCP). LCP currently holds over $1.5 billion in international real estate. For their part, LCP provided the properties to be tokenized.
In this particular instance, AssetBlock chose to tokenize $60 million in luxury hotel properties. According to company executives, these properties are only available to blockchain investors.
AssetBlock – More Opportunities
Speaking on the decision, AssetBlock CEO, Mike Lidell touched on the importance of merging traditional and non-traditional investors in an efficient manner. He explained that this is the best way to create more opportunities for everyone in the market.
Additionally, Steve Kisielica, the Principal CIO of LCP described how the maneuver creates a new investment pool in the market. He also spoke on the responsibility companies have in terms of embracing new technology that simplifies the market.
Coming Soon
AssetBlock officials are serious about getting these tokens out to investors. The company officially earmarked the token launch for mid-October.
Real Estate is Growing Digital
The company’s decision mirrors that of some of the biggest players in the game in some aspects. Just this week, Securities reported on Harbor tokenizing $100 million in real estate funds for much of the same reason.
AssetBlock
You have to give it to AssetBlock for it’s out of the box thinking. Utilizing a Proof-of-Stake blockchain is a great way to avoid future issues related to energy consumption. You can expect this deal to boost the notoriety of all the firms involved, as well as the possibilities of using PoS blockchains for tokenized real estate.
Acquisition
Today it was announced that PayRue has acquired a cryptocurrency exchange, developed by TokenMarket.
With PayRue already holding the appropriate licensing in Estonia to launch an exchange, it is expected that the service will go live sooner than later.
This move goes beyond simply taking control of a cryptocurrency exchange, however. The acquisition is part of a larger partnership which will see the pair of companies work to ensure future integration of services throughout their platforms. The companies state that this integration will benefit their client base, currently numbering over 200,000 and growing.
Increased Focus
This acquisition caught our attention, specifically, due to the reasoning behind it. On the part of TokenMarket, this move was undertaken with the intent to focus their efforts more completely on the advancement of the digital securities sector.
Over the past few months, TokenMarket, has made it clear that this is where they believe the future lies, and are hitching themselves to the wagon. Whether undergoing their own STO, or working to develop services and obtain appropriate licensures, they are quickly setting themselves up to be a leader in the space.
Commentary
Upon announcing the acquisition and re-focusing efforts discussed here today, representatives from each, PayRue and TokenMarket, took the time to comment. The following is what the CEO of each company had to say on the matter.
Mikael Olofsson, CEO of PayRue, stated,
“Working with TokenMarket on a cryptocurrency trading platform is an exciting development for PayRue. Some may see the exchange market as crowded, but our view is that regulated decentralised exchanges are the next evolution and very few companies are prepared for this. We believe that our users will benefit from the security and transparency that centralised exchanges are currently failing to deliver, as showcased with the continuous hacks and fake trading volume”
Ransu Salovaara, CEO at TokenMarket, stated,
“We are excited to work with PayRue as we believe there will be a monumental shift to regulated wallets and exchanges. This partnership allows us to put all our focus on token issuance and the tokenised securities market, which we expect will be a billion dollar business in the coming years.”
Speaking with Mikko
We recently had the pleasure of completing an exclusive interview with the Chief Technology Officer of TokenMarket – Mikko Ohtamaa. In this interview, Mikko, discusses, not only his own foray into blockchain, but the future of TokenMarket within the industry.
Interview Series – Mikko Ohtamaa, CTO at TokenMarket
TokenMarket
Founded in 2017, TokenMarket is a crowdfunding platform based out of Gibraltar. Their efforts are focused on the development of the digital securities sector, through the use of blockchain technologies. To date, TokenMarket has assisted various companies’ complete successful token sales. This includes Storj, Ethos, and more.
CEO, Ransu Salovaara, currently oversees company operations.
PayRue
Operating out of London, England, PayRue is a tech company which offers services surrounding cryptocurrencies. This includes a mobile payment app, along with the acquired capabilities discussed here today.
CEO, Mikael Olofsson, currently oversees company operations.
In Other News
To date, we have detailed developments pertaining to TokenMarket on various occasions. The following articles elaborate on a few of their developments from the past year.
TokenMarket Gains FCA Approval, While Partnering with CMS equIP
TokenMarket to Host Security Token Offering
This week, the World Blockchain Initiative – WORBLI – announced plans to revolutionize the STO sector. To accomplish this monumental task, the firm plans to create the world’s most cost-effective and pro-developer blockchain ecosystem to date. The news signals a key shift in strategy by smaller firms, as well as, a continued interest by companies seeking a blockchain-based IPO alternative.
World Blockchain Initiative WORBLI
The WORBLI platform is an STO ecosystem which allows businesses to share in the firm’s extensive library of decentralized apps (Dapps) without the need to hire custom developers. Think of WORBLI as kind of like a blockchain a la carte. In this manner, users can pick exactly what services they require and integrate these services without creating a large workload.
According to WORBLI executives, the platform’s design enables endless possibilities for future developers. For example, a client can add GEO Fencing to their security token. This feature ensures that the token never is sold outside the compliance region.
Identity-based Financial Tiers
Another cool feature is the ability to utilize identity-based financial tiers. You can compartmentalize your STO and only allow certain investors the ability to participate in particular investments. This feature allows firms to better market services to accredited-investors without cutting out smaller contributors.
WORBLI Team via Website
WORBLI Works on Any Blockchain
Perhaps the most impressive feature of the WORBLI platform is that it can function on any blockchain. Allowing users to choose their favorite blockchain is a smart way to facilitate market integration, and gain trust from users.
Eliminating Middlemen
In a recent post, WORBLI developers spoke on the rising costs associated with traditional IPOs. Notably, the company pointed out that soon, only mega-corporations will have the capital to host one. To add to the point, developers also spoke on the recent closures of numerous blockchain firms after the institution of more expensive regulatory framework derailed their budgets.
Stifling Innovation
However, one of the most interesting points covered in the post was the fact that these costs also stifle innovation. This innovation is critical for the development of the digital economy. This is why WARBLI set out to create a platform that delivers STO services at an affordable rate in the first place.
WARBLI Network Expands
Most recently, WORLI made headlines after partnering with a blockchain-based digital content timestamp platform called WordProof. WordProof allows content creators to prove ownership of their creations easily and with the validity of the blockchain.
Another noteworthy partnership WORBLI made is with EDNA. EDNA is a DNA firm that seeks to bring more transparency to the DNA market. Currently, DNA firms have little accountability. This lack of transparency has led to a rise in public concern about the use of their DNA after the testing ends.
WORBLI Has a Smart Strategy
WORBLI seems to have a new approach to the STO market. The fact that users can utilize their favorite blockchain could be a big draw for businesses familiar with cryptocurrencies. For now, the firm looks to become a major force in the space.
