This month, the Gemini exchange applied for a broker-dealer license from the Financial Industry Regulatory Authority (FINRA). The popular trading platform seeks to gain approval from FINRA as an Alternative Trading System (ATS). If successful, the Gemini exchange would be amongst an exclusive class of FINRA approved crypto organizations.
Gemini’s approach to the market has been to include regulators throughout every step of the platform’s development. In 2015, Gemini first received approval from the New York Department of Financial Services (NYDFS) to custody digital assets. The exchange was among the first to receive this licensing. Consequently, the exchange has held a strong position in the market.
Since that time, Gemini has sought approval on a number of occasions including when adding new tokens. For example, the exchange decided to seek NYDFS approval to add Bitcoin Cash (BCH) to the platform in December 2018. Now, the company wants to extend its approval to the national stage.
While Gemini continues to push for national approval, FINRA continues to drag their feet. Currently, there are 40+ applicants awaiting FINRA approval for blockchain-related projects. Unfortunately, the organization appears to be hesitant about supporting these firms at this point. Importantly, FINRA issued a statement this week discussing the approval process and the delays.
Gemini employed some unique strategies to date in order to service the growing demand for regulated security tokens. Previously, the platform partnered with Harbor to allow investors to purchase digital securities. For its part, Harbor provided users access to the platform’s stable coin – GUSD. Investors would make purchases and receive dividends using this stable coin.
In a recent interview, Harbor’s CEO, Joshua Stein took a moment to discuss the growing demand for security tokens by traditional investment firms, and why Gemini’s strategy is more efficient. He praised the firm’s pro-regulatory approach before describing how the new regulations altered the market since 2017.
An Inclusive Strategy
While many of the details of the company’s plans remain private, there are reports that indicate the platform will allow third-party securities to trade. If this is the case, you can expect to see Harbor as one of the main companies to take part in the exchange’s expansion.
The Gemini exchange is owned by the famed Winklevoss twins. These Harvard school graduates have long been pioneers in the crypto-space. Notably, in Dec 2017, the twins became one of the first official Bitcoin billionaires. Since that time, the Cameron and Tyler Winklevoss continued their crypto aspirations, which led to the founding of the Gemini exchange.
Gemini Aims High
The Gemini exchange seeks to be the dominant exchange in the crypto-sphere. If the firm is able to leverage its vast experience and network, it’s possible that FINRA may approve the company’s strategy moving forward. Regardless of the outcome, you can expect to hear more from this innovative platform in the coming weeks, as the security token sector continues to heat up.
Vertalo Integrates Insurance Software ‘TigerMark’ by Assurely
Today, digital securities specialists, Vertalo, and Insurance specialists, Assurely, have announced the formation of a strategic partnership. This alliance will see Vertalo integrate software, known as TigerMark, into their platform.
The integration will provide Vertalo clients with increased security, as they will now have the option to insure DSOs taking place on the platform.
This product, formerly known as ‘CrowdProtector’, functions with two primary goals aimed toward the tokenization process.
- Protect Token Issuers
- Regardless of how well thought out, and structured, a DSO may be, there always remains the potential for an investor to become disillusioned with a company. TigerMark protects token issuers from potential lawsuits brought forth by said investors.
- Protect Token Investors
- One of the main draws towards DSO/STOs, is the oversight and necessary compliance with regulations. TigerMark works to protect investors, by ensuring that token issuers remain in line, and transparent with their regulatory obligations.
The CEO of each Vertalo, and Assurely, took the time upon announcing their partnership, to comment on the development. The following is what each had to say on how the sector will benefit from this move.
Dave Hendricks, CEO of Vertalo, stated,
“Mainstream adoption of digital assets has been hindered by complicated token issuances and wallets designed for experts, leaving many waiting on the sidelines for a better user experience. Because of usability challenges and sub-par offerings, most investors haven’t had the confidence to invest in new digital offerings, despite their promised gains and liquidity. Through Vertalo’s partnership and integration with Assurely, both issuers and investors can now have more confidence that their investments in these new digital instruments are backed by the power of insurance, protected against simple administrative errors or unfortunate malfeasance.”
David Carpentier, CEO of Assurely, stated,
“Partnering with Vertalo is a significant step the digital assets industry and for Assurely Integrating our products and process with Vertalo allows us to continue to increase the trust, confidence, and safety of investing in digital assets. We are able to deploy an instantaneous, automated, and application-free insurance purchasing process that customizes risk products to what is needed, when it is needed. It is a powerful partnership and we are thrilled to contribute to Vertalo’s mission of advancing this industry for the benefit of all stakeholders involved.”
Speaking with Dave
We were recently fortunate to have completed an exclusive interview with Vertalo CEO, Dave Hendricks. In this discussion, Dave touches on various aspects of Vertalo and their suite of services. Check out the interview below to learn more about the company and their offerings.
Founded in 2017, Vertalo is a Texas based company. While this young company began their journey into digital securities as ‘cap-table’ specialists, their purview has continued to grow through software development, and the forging of various strategic partnerships.
CEO, Dave Hendricks, currently oversees company operations.
Founded in 2016, Assurely maintains headquarters in New York. In the time since their formation, the company has strived to provide products which merge traditional insurance options with blockchain technologies.
CEO, David Carpentier, currently oversees company operations.
In Other News
For those looking to learn a bit more about TigerMark, make sure to check out this following article. TigerMark was originally released under the name ‘CrowdProtector’. While the name has changed, the mission has not, and as seen here today, adoption is beginning to occur.
Overstock to End Stock Lockup Early – OSTKO
This week, Overstock.com announced revisions to its Series A-1 Preferred Stock (OSTKO). The firm wants to drop trading restrictions and allow investors to trade OSTKO shares immediately. This pioneering strategy provides liquidity to investors in a manner that wasn’t possible before the advent of blockchain tech.
Eliminate Rule 144 – OSTKO
All traditional shares require a six-month lockup period to be compliant with SEC Rule 144. During this period a series of processes occur to finalize the purchase. Overstock automated these procedures via smart contracts. Now the company seeks SEC approval to eliminate the need to adhere to Rule 144 in this instance.
The Original OSTKO Launch Date
The original record date for the OSTKO launch was September 23, but company executives postponed the date to push their new strategy. Now, Overstock plans to announce the new record date sometime in the next two months.
The new tokenized shares will be slightly different than their traditional counterparts. For example, Overstock’s board approved a conversion rate of one digital series A-1 preferred stock to ten shares in common stocks. Interestingly, the company chose to make the new stock only available via the Dinosaur Financial Group brokerage platform.
The Dinosaur Financial Group is also a partner with tZERO, Overstock’s blockchain subsidiary. In both instances, the Dinosaur Financial Group functions as the broker-dealer. Basically, the firm provides brokerage accounts for investors seeking to trade these digital assets.
Discussing the partnership at that time, Dinosaur’s Managing Director of Equity, Elliot Grossman described his company’s pride in being a pioneer in the industry. He said that the technology has the potential to create “disruptive changes for issuance, trading, and settlement in capital markets.” Today, Grossman is the CEO of tZERO.
Speaking on the OSTKO shares, Overstock’s Interim CEO, Jonathon Johnson discussed the interest seen from broker-dealers, regulators, and shareholders. He called the technology groundbreaking before touting integrated compliance and investor protections.
Most importantly, Johnson explained that blockchain technology improves the overall investor experience. He also described the tech as having an “enormous potential to transform society for the better.”
Slow Short Selling
It was Overstock’s ex-CEO, Patrick Byrne who first thought up the idea of tokenizing shares. Ironically, the strategy originated as a way to stop ramped short selling of their stock. Byrne claims a well-organized group of fraudsters targeted Overstock for the last year via these short sales attacks.
The short sellers seemed to only work with dollars so the plan to tokenize worked great. That was until early this week when Morgan Stanly and JPMorgan started accepting fiat payments for the tokenized stock. The news caused an investor frenzy that sent Overstock shares down 40% from a recent 52-week high.
Overstock is Full Blockchain
It’s interesting to see how Overstock uses its blockchain know-how to navigate the market-scape. In this case, the use of blockchain to stop short sales attacks resulted in the development of a better investor experience. You can expect to see more from these innovative developers in the coming weeks as OSTKO goes live.
AssetBlock Tokenizes $60 Million Real Estate Fund
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.
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.
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.
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.
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.