Security token issuance and management platform provider Harbor announced a major new iteration of its platform this week on its Medium blog. The first version of Harbor’s platform was available only as a managed service. The new version, dubbed ‘Harbor Platform 2.0,’ features a dashboard that token issuers can use to customize investor management and liquidity protocol settings.
Harbor claims that Harbor Platform 2.0 will provide fast-growing startups a way to raise funds directly from investors without having to go through intermediaries. Harbor Platform 2.0 is designed to give the security token issuer control over their cap table, including the ability to unlock liquidity to select groups of investors.
Harbor CEO Josh Stein said, “Startups want new ways to raise capital directly from investors, not only through intermediaries. They want to open up fundraising to a broader network including customers, partners, and fans who are key to their success, while still being in control of their cap table. Harbor Platform 2.0 is a turnkey solution for tokenizing private company equity that enables startups to open up fundraising directly to a broader group of investors and create innovative equity programs. Harbor allows companies to create liquidity options under controlled conditions and limit trading among trusted parties. Startups can now create more liquid, yet controlled, equity programs for key external stakeholders, not just employees.”
Harbor described several Platform 2.0 use case examples in the announcement, all based on conversations with prospective clients. The examples show how a startup can leverage its client base to attract additional funding at a lower cost than it would incur otherwise.
One example involves sports franchises looking to raise fresh capital: “Sports and esports teams can drive fan engagement by allowing them to become minority owners. Fan equity programs can include dividend-generating ownership without control provisions, and instead bundle in unique owner benefits such as private meetings with players, unique merchandise, and special ticket offers.”
Harbor Platform 2.0 features an issuer dashboard with real-time cap table details, an issuer-branded investor portal, and partially-automated investor onboarding and verification functionalities. A module dubbed ‘Trusted Parties’ manages smart contract compliance protocols to enforce rules and exemptions on security token trading and transfers.
Arisa Amano, Harbor’s chief product officer, noted that Harbor Platform 2.0 allows startups to lock up capital without locking in investors. Amano said, “Some companies and funds want to closely control their cap table, but also unlock liquidity among a closed network of investors. The ability to restrict liquidity among trusted parties is only possible with a solution like Harbor that tracks the real-world identity of buyers and sellers. As a result, companies can allow selected investors to trade in and out according to rules they set, above and beyond compliance with securities laws. A real-time issuer dashboard provides startups complete visibility and control over changes in ownership.”
Harbor Platform 2.0 includes APIs that can connect with a company’s existing infrastructure for electronic signatures, accreditation checks, and KYC/AML. Harbor partner BitGo provides the Harbor Platform 2.0 with BitGo Custody and BitGo multi-signature wallets.
Harbor is backed several Bay Area venture capital funds including Andreessen Horowitz, Craft Ventures, Founders Fund, and Pantera Capital.
Thai Government to Use Blockchain in Bond Issuance
Another minor, but significant development in digital securitization is unfolding in Thailand, where the public debt management office (PDMO) is set to issue government saving bonds that will be distributed with the help of blockchain.
This is an initial trial done by PDMO, which is part of the country’s finance ministry, to leverage the blockchain technology in issuing and distributing government bonds to the public.
According to local reports, the office is issuing bonds in total value of around $6.5 million (200 million baht). One particular feature of the blockchain technology is already clearly visible, as the bonds are being sold at a face value of 1 baht – the lowest ever amount for government bonds, which are usually priced at 1,000 baht.
Why is Bond Tokenization Important
The bond market is one of the oldest and most relied-upon asset classes, providing key financing for governments, corporations, and investors. Despite the market’s popularity with both institutional and retail investors, digitization has been incredibly slow.
Bond issuance is generally a long process that involves multiple intermediaries, incurring high costs and the risk of human error. These are common pain points in the financial securities market that technological innovations are hoping to solve.
This is where bond tokenization comes into play with the aim to lower the various costs associated with bond issuance. The application of blockchain technology can benefit the bond market as a whole by enhancing data visibility, reducing counterparty risk, and improving operational efficiency.
When buying and selling bonds, buyers can instantly verify that the sellers own the bond by looking at the blockchain. This also immediately eliminates the need of having intermediaries since the bond lives on a trustless and immutable ledger.
Blockchain also eases the process of bond issuance with the terms and conditions including the principal amount, coupon rate, and maturity date, being ingrained into code. As a result, the payment process can be automated: issuers can distribute interest payments directly to the bondholder’s wallet address.
With the novel technology, issuers of securities have the possibility to represent financial assets as granular as necessary. Since verifications, transactions and settlements take place on a blockchain ledger, there is no additional hassle or paperwork to go through, compared to traditional methods of asset securitization and distribution.
This is a huge advantage technology provides and general director of the PDMO Patricia Mongkhonvanit, recognizes that this will also open up new opportunities for everyone to buy government bonds:
“This should enable more people at the grassroots level to buy the government’s saving bonds,”
Thailand Pressing Forward with Digital Securitization
The government savings bonds will be available for purchase through the Krung Thai Bank’s (KTB) blockchain platform, which is wholly state-owned and the distribution will take place through an e-wallet. While this is an entirely novel way of conducting a government bond issuance, it is not an unfamiliar experience for many.
If the smallest bond partition is 1 baht, the minimum acquiring limit is set at 100 bonds per purchaser, with investment capped at 500,000 baht – according to PDMO.
The initial rollout will take place through digital channels, but PDMO also plans to broaden savings bond distribution channels to bank branches, ATMs and mobile banking.
In order to gauge public interest and spread the message, the government had beforehand let people subscribe through the blockchain-based e-wallet. The 200-million-baht savings bond offering is an initial test and those who are interested in participating must have accounts at KTB and apply through the bank’s e-wallet.
Thailand’s PDMO had recently closed the sales of savings bonds worth 50 billion baht, which was part of the government’s 1-trillion-baht plan to mitigate the economic damage following the COVID-19 pandemic.
The rising interest on the side of the Thai government to pursue more efficient ways for issuing bonds is further confirmation that the role of blockchain technology for digital asset securitization is broadening. Should the trial issuance on the blockchain be viewed as a success, there is a chance to see more government bonds being distributed this way.
Thailand has also been one of the countries eager to step forward with their experimentation of blockchains for financial securitization. For instance, back in 2019 the Thailand Bond Market Association announced it would adopt blockchain for bond registration. The local Toyota Leasing in the country had issued a blockchain bond. In addition to that, the stock exchange also has plans to launch a blockchain-based digital asset platform.
TokenSoft Launches Major Wallet Upgrade
This week, the SEC-regulated security token issuance platform, TokenSoft introduced a major upgrade. The new functionality comes in the form of a self-managed wallet for traders. The revamped system promises to be an easy-to-use interface coupled with advanced safety measures. Notably, the upgrade falls in line with TokenSoft’s recent expansions in the market.
Importantly, the new wallet features a less technical user interface. As such, users can easily maintain and manage investments directly from the wallet portal. Additionally, the new wallet integrates a host of regulatory-compliant safety measures, most similar in nature to Ethereum’s ERC-1404 protocol. Also, the wallet includes benefits for issuers as well. For example, there is built-in reporting to simplify auditing systems. Additionally, users receive automated dividend distributions, which also reduces transaction costs.
ITokenSoft added some important security updates to their wallet as well. For accounts that hold over $1 billion in investments, a new Multi-signature system is available. The system utilizes a key mannequin to provide the highest level of protection for your digital assets. Multi-signature wallets provide more protection than traditional wallets. Mainly because there are multiple keys required to complete a transaction.
Discussing the upgrade, TokenSoft CEO, Mason Borda described the excitement surrounding the project. He explained how the new wallet pairs a “safety package” with a simplified UX. This simplification of the STO process is sure to benefit the firm’s 100,000 registered traders.
Additionally, Jordan Davis, Director of Enterprise, described the effect of the upgrade within the financial markets. He stated that these new features apply pressure on traditional financial institutions to reply with a similar product. In turn, all investors benefit because of the new administration instruments. Davis envisions a day where you can easily choose what providers have access to your account, as easy as you choose Netflix shows to watch.
Last Wallet Upgrade
TokenSoft’s last major wallet upgrade came in January 2019. At that time, the firm announced the launch of its Knox Wallet. Impressively, the Knox Wallet was one of the first mobile, cold-storage solutions for securing digital securities.
TokenSoft entered the market in 2017 with the goal to simplify the issuance and management of digital securities on the blockchain, at scale, and within compliance. The San Francisco-based firm currently offers a full suite of security token and tokenization services. Since its inception, the company continued to gain popularity. Today, TokenSoft is one of the most recognizable names in the market.
In December, the firm’s subsidiary, DTAC LLC registered with the SEC as a Transfer Agent. Importantly, the firm also partnered with Ex- Israeli military cybersecurity firm – HUB Security this month. HUB now provides TokenSoft advanced end-to-end encryption protection on USB and Bluetooth devices.
TokenSoft Gains Momentum
TokenSoft continues to make headlines across the sector for its innovative approach to the market. The firm consistently advances its functionality and positioning. You can expect this latest upgrade to further cement TokenSoft as an industry leader.
TokenSoft Partners with Ex-Military Cyber Firm Hub Security
This week, the token issuance platform, TokenSoft made major upgrades to the security of its systems via a partnership with Israel’s ex-military cyber firm Hub Security. The maneuver gives Tokensoft access to some of the most advanced security features in the world. As such, the partnership bolsters the firm’s market positioning in a major way.
Discussing the new partnership, Mason Borda, TokenSoft’s CEO explained his firm’s dedication to customer security as a key priority. Additionally, he spoke on how the current state of the market lacks access to institutional-grade technology solutions for security tokens. Borda stated that his firm was “delighted” to partner with such a reputable security service provider.
Consequently, Tokensoft now offers users top-tier, military-grade protection for their tokens, keys, and assets. The integration gives Tokensoft the most advanced key management solution available in the market today.
Specifically, clients of TokenSoft’s transfer agent, DTAC are now privy to military-grade cybersecurity tactics. These security upgrades include FIPS140-2 Level 4 protection. On top of this protection, TokenSoft now offers a combination of hardware and software solutions to keep your tokens safe. These features include a multi-signature vault, a hardware firewall, and access control. Notably, the platform also integrates a neural network learning system designed to anticipate cyberattacks
Hub Security’s miniHSM solution provides governments, militaries, and companies end-to-end encrypted USB and wireless Bluetooth connectivity. This strategy creates a cryptographic environment for the whole lifecycle of digital assets. Developers believe this approach will help curb attacks from organized crime and hackers in the future.
Additionally, TokenSoft now gains access to Hub’s management solution. This suite of products includes Hub Security’s HSM device and independent OS for the encryption, management, and distribution of keys.
Speaking on the development, Eyal Moshe CEO of Hub Security touted the reasoning behind an end-to-end approach to the development and delivery of hardware and software components. He described why this strategy provides the highest level of security throughout the entire product lifecycle. Interestingly, he pointed out that the Covid-19 pandemic prevents people from “operating the on-premise security systems that controls large amounts of assets.”
Tokensoft entered the market in 2017 with the goal to simplify the processes involved for companies seeking to issue and manage digital securities on the blockchain, at scale, and within compliance. Recently, the firm acquired a stake in an SEC-regulated firm in a move that allows the company to operate as a registered broker-dealer in the US.
Hub Security entered the market on Nov 1, 2017. The firm offers hardware security solutions for regulation, privacy, fintech, cloud, and blockchain systems. Specifically, the company specializes in blockchain, cybersecurity, financial services, FinTech, information technology, and privacy products.
TokenSoft – Security First
TokenSoft is now ready to continue on its path towards tokenizing the global markets. This company made the right move when it decided to beef up its security via Hub. Now, the platform can offer its users the highest level of protection available. This added protection is critical when you consider the number of attacks these platforms continue to encounter. Hopefully, the new security measures will prove effective at protecting users tokens in the future.