The security token sector continues to organize on a large scale through the use of groups and strategic partnerships. This month, the VC and financial consulting firm MAS Capital announced plans to join the Security Token Alliance in the coming weeks. The move strengthens the security token sector and brings MAS Capital’s experience in line with the STA’s growing community of professionals.
Mas Capital provides an innovative and unique approach to the blockchain sector. The firm specializes in funding and advising firms on how to go public in the US. The company is a pioneer in the reverse merger and IPO sectors.
Reverse Merger vs IPO
A reverse merger is an investment strategy that allows a company to go public for far less than traditional IPOs. Traditional IPOs are complicated by nature. In order for a company to host an IPO, they must first hire an investment bank to underwrite their shares.
In addition to this step, an IPO requires a lot of due diligence. Companies must be aware of the current market climate in order to time their launch optimally. Also, these companies must meet a long list of regulatory compliance measures prior to the start of their crowdfunding campaign. When companies utilize a reverse merger strategy, they eliminate much of these costs and delays.
How a Reverse Merger Works
In a reverse merger scenario, a private company will merge with an already public-listed company. In this way, private business can instantly go public. The strategy is simple but it does have some drawbacks. Primarily, those companies are unable to raise funds immediately using this strategy.
The Security Token Alliance
Now, Mas Capital wants to bring its experience to the Security Token Alliance in a major way. The STA is one of the most publicized security token groups in the space. The STA’s goal is to bring together diverse organizations for the betterment of the entire security token sector. The group currently has 32 handpicked members from across the globe.
According to the STA’s homepage, the security token sector has unlimited potential, with some estimates going as high as $10 trillion. Importantly, the STA seeks to eliminate adoption delays due to lack of clarity among industry professionals such as lawyers, stakeholder, advisors, and compliance officers.
The STA is the brainchild of long-time blockchain enthusiast, Fredrick Bussler. Bussler created the STA in 2019 with the goal to become the world’s largest think-tank for the security token industry. Many see the group’s role as critical in the development of security token industry standards. Currently, the industry is fragmented, with multiple factions all working towards separate goals. The STA seeks to transform these different pieces of the puzzle into one cohesive movement.
For their part, MAS Capital is set to launch a new security token exchange called MASEx. The exchange will bring the STA directly into the growing number of security token exchanges launched this year.
Speaking on the decision to join the STA, the Chairman of MAS Capital, Aaron Tsai elaborated on how MASEx will provide the STA with a global security token exchange in which to list the groups growing number of STOs. Tsai also took a moment to discuss the trends currently seen in the sector. He cited the fact that STOs continue to launch in the US, EU, and Asia.
MAS Por Favor
MAS Capital seeks to become a major player in the security token sector. Their latest maneuver is sure to better the firm’s position in the market. Now, the STA is set to push their group to new levels, while at the same time increasing the overall education in the marketplace. You can expect to see this partnership make some serious moves in the coming months.
BlockState Gains Clarity on STO Taxation Within Switzerland
No Tax. No Vat.
BlockState, a Swiss digital securities issuance platform, has recently closed their very own STO. Upon doing so, multiple questions were raised with regard to how capital, brought in during this event, would be taxed.
The STO hosted by BlockState represented the first of its kind in the region, making the young company a trailblazer within the digital securities sector.
As stated by BlockState, confusion remains on the taxation of capital raised through STOs…until now.
In an effort to gain clarity on the situation, and set a precedent moving forward, BlockState turned to PST Legal. This law firm was tasked with gaining clarity from Swiss regulators. Their efforts were successful, with recent rulings being doled out.
It was ruled that capital raised through such means would NOT be subjected to either profit tax, nor value-added-tax (VAT). Rather, much like traditional capital raises, funds garnered through STOs structured in such as manner would only be subjected to ‘security issue tax’.
By achieving this, BlockState has not only made their own path easier moving forward, but for others as well. This ruling provides future STOs with precedent and clarity on how their actions will be received by regulators.
In their release, BlockState comments on the development. They state that it was concluded that the,
“…issuance and the profit on the sale of own shares through a security token offering in this specific case does not trigger profit tax and added-value tax, but security issue tax. This is a unique tax clarification for the BlockState’s security token offering model and marks the first time that a Swiss tax authority has issued a ruling on the tax classification of an equity STO.”
With this development, BlockState commented on what it means to them. It was stated,
“We are excited to be part of the progress in this space, not only developing leading technology and legal frameworks, but being able to play an active role in the regulatory conversation around security tokenisation.”
BlockState is a Switzerland based company, which was founded in 2018. Above all, Blockstate acts as an issuance platform for companies looking to tokenize assets. The company operates with a mission of unlocking trapped wealth, through the use of blockchain technologies.
CEO, Paul Claudius, currently oversees company operations.
With their progressive approach to blockchain, and companies taking part within the industry, Switzerland is fast becoming a hub for the technology. This has led to the town of Zug being dubbed ‘Crypto Valley’.
Companies involved with blockchain have been drawn to the area, as the Swiss government has taken the initiative to provide clarity on law and regulations governing the sector. Being afforded this clarity allows for these companies to operate efficiently, and without fear of repercussions for actions taken.
In Other News
In months past, we have detailed development pertaining to BlockState multiple times. From their migration of ERC tokens, to hosting STOs on behalf of others, BlockState has remained busy. The following articles dive deeper into each of these events
Prime Trust to Utilize Various Services Provided by Vertalo
On-Chain Cap Table
Building off of a relationship first established in 2018, Prime Trust and Vertalo have announced new growth in this partnership.
This development will see Prime Trust utilize, and benefit, from services provided by Vertalo, including cap-table management.
For a company to be successful, it is of great importance to have a thorough knowledge of its equity breakdown – including values, dilution, ownership, etc. This tedious process is made simple through services provided by companies such as Vertalo.
In their announcement, this paring of companies notes various areas in which they will find themselves cooperating. The following points were provided in their press release, describing how they will be working together.
- The creation and support of on-chain cap tables for thousands of Prime Trust crowdfunding issuers through the Vertalo Registry, a service which is directly connected to Prime Trust’s Custody, KYC/AML, escrow, and onboarding services
- Preferential pricing for Prime Trust clients who choose to utilize Vertalo’s B2B SaaS cap table platform, and simple opt-out for those who wish to use a spreadsheet or other platform to manage their investor file
- The option for participating issuers (Prime Trust clients) to tokenize their cap tables from within their branded Vertalo interface at any time in the future, using any issuance platform or smart contract that is supported by an exchange and partnered with Vertalo
Representatives from each company took the time to elaborate on this partnership, and what it means moving forward. The following is what each had to say on the matter.
Kevin Lehtiniitty, CPO for Prime Trust, states,
“Vertalo has come to the realization that mass adoption of asset tokenization requires that blockchain specific concepts such as wallets and addresses be black-boxed from the typical retail user. We at Prime Trust share the belief with the Vertalo team that crossing the chasm requires abstraction and simplicity, which makes us excited to announce this partnership. Using Vertalo’s very intuitive tools, any issuers from our crowdfunding business will be able to manage and tokenize their securities as well as provide their investors with UI access to view their investment. We’re very excited to continue working with the team at Vertalo on expanding our partnership and offering this tokenization potential to all our issuers. There’s much more to come with Vertalo which we’ll share with the world when the time is right.”
Dave Hendricks, CEO of Vertalo, states,
“Vertalo’s partnership with Prime Trust will provide their thousands of clients with Vertalo’s on-chain cap table, issuer and investor interfaces, enabling Prime Trust’s clients to directly connect with their investors for the goal of improving the investor relations and ownership experience. Prime Trust clients who convert to Vertalo will also be provided with ultra-low cost ‘optional tokenization’ of their cap table in the event that they want to convert their paper shares to digital assets for trading on Vertalo partners such as OpenFinance. This deep integration between Prime Trust and Vertalo builds on more than a year of co-development effort that has sought to simplify the purchase, management and sale of digital assets for both issuers and investors. We’re proud to work with the team at Prime Trust and look forward to announcing more useful innovations together soon.”
Operating out of Las Vegas, Prime Trust was founded in 2016. The team at Prime Trust has developed a variety of offerings serving the digital securities sector. This includes custody, escrow, compliance, and more.
CEO, Scott Purcell, currently oversees company operations.
Operating out of Texas, Vertalo first launched in 2017. The company offers a variety of services tailored towards the blockchain industry – ranging from cap table management, to an issuance platform, and more. To date, they remain one of the most active companies within the digital securities sector.
In our on-going interview series, we have had the pleasure of interviewing CEO, Dave Hendricks. Visit this interview below to learn more about Vertalo and their plans for the future.
In Other News
Each of the companies discussed here today have caught our attention on multiple occasions over the past year. The following articles elaborate on a few of the developments which each have made during this time.
RISE Secures Broker-Dealer in Entoro Capital
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RISE Wealth Technologies has announced that they have secured a broker-dealer for their currently live security token offering. This role has been filled by Entoro Capital, and will see them provide their services immediately.
In their current STO, RISE has set out with a goal of raising $120 million in funding. These funds are being raised, as the company looks to fuel their continued expansion and product development.
For investors that take part in the STO, they will be rewarded with a variety of benefits.
- Regular Dividends garnered from various platform features
- 4% p.a. Extra Payback in addition to Profit Payouts
- Entitlement to Proceeds should RISE undergo an IPO
Upon making their announcement, representatives from each, Entoro Capital and Rise, took the time to comment. The following is what each had to say on the development.
James C. Row, Managing Partner at Entoro Capital, stated,
“RISE is led by serial-entrepreneurs with a strong management team and a proven track record, which was crucial to us…A strong confidence in the team is paired with a shared belief that the future in asset management will be technology-driven. This makes RISE a perfect fit for Entoro.”
Stefan Tittel, CEO of RISE, stated,
“We are excited to be partnering with Entoro who has proven to be an experienced partner for companies within the FinTech industry…Their strong cross-industrial network has for years been a valuable asset to many partnerships. With the Broker-Dealer Agreement for Capital Raise we anticipate a great deal of mutually beneficial opportunities and synergies for both companies – with most of these benefits accruing to our clients.”
RISE Wealth Technologies
RISE has operated since 2012, within Grunwald, Germany. Through the use of AI, the team at RISE have developed a set of trading algorithms. These are built to provide retail investors with access to professional style trading tactics.
CEO, Stefan Tittel, currently oversees company operations.
We recently covered RISE, as they look to raise capital through and STO. Check out the following article to learn more about this event.
Operating out of Houston, Texas, Entoro Capital is an investment bank that has shown great interest in blockchain technologies. This interest has led them to develop services and platforms such as OfferBoard, Entoro Xpress, and more.
Managing Partner, James C. Row, currently oversees company operations.
Strategic Partnerships Abound
This is not the first time that Entoro has played a pivotal role in an STO, or as half of a strategic partnership. The following articles discuss various examples demonstrating their rapid development and adoption as of late.