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NEO Announces Formation of Security Token Industry Consortium

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The NEO Project's “NEO Global Development” (NGD) group announced last week that it had formed a consortium to explore and understand the growing digital securities sector. The alliance, dubbed the Digital Asset Alliance (DAA), will endeavor to articulate and document the nuances of security laws as they apply to asset tokenization across different jurisdictions and assets classes.

The DAA opened its new blog with this statement:”Digital Asset Alliance is a NEO backed initiative discussing security token related issues. We aim at building an open-source platform for security token life-cycle service providers, and developing best practices for the growth of tokenized networks.”

Helping to foster development and community

The Digital Asset Alliance aims to cultivate consensus, thus enabling NEO blockchain developers, as well as the global blockchain development community at large, to create a legally compliant security token standard. NEO's NEP-5 standard can already be applied to security tokens, though it is up to the issuer to implement regulatory criteria at the smart contract level.

NGD global business development manager, Tamar Salant, said, “We will be collecting insights and then presenting them to the community and saying, you know, ‘These are the top 10 highest priorities – How do we translate this into code? How do we make sure this is in every smart contract?’ Because we know this is a standard that is very much needed. And I think when we’re looking at securities and digital assets, we’re touching on a few different fields.”

Onboarding industry players

The DAA will bring together a diverse group of parties drawn from what Salant calls the “supply chain of security tokens”: “Our virtual round table is a gathering of people from all across the globe, whether its issuance platforms or projects, or law firms, or liquidity providers, or AML/KYC providers – we’re getting a sense of what everyone is looking at.”

The blog introduced some of the first security token industry players to join the DAA:

  • Better Alternatives, an Israel-based boutique blockchain advisory firm working with two STO projects hoping to launch in the U.S. in 2020.
  • DLx Law, a New York City-based capital markets law firm pivoting to focus on the security token space.
  • Globacap, a London-based STO sandbox regulated under the UK Financial Conduct Authority, going live with it first two STO launches in March.
  • Hashgard, a Shanghai-based STO services provider developing its own security token standards.
  • Liquefy, a Hong Kong-based STO platform planning to launch its first STO sometime in 2019.
  • Republic, a New York City-based crowdfunding platform with a mission to enable retail investors to invest in seed-stage startups.
  • Vertalo, an Austin Texas-based security token investor matching, compliance, and cap table solutions provider.

A global blockchain securities compliance hub

The mission of NEO's existing “Global Blockchain Compliance Hub” repository will be expanded to complement DAA’s mission. Tamar Salant explained, “We’re starting to create specific categories in regards to STOs. So, not just about using blockchain technology or tokenizing assets, but really looking at the existing securities laws. So many regulators out there are issuing sandboxes, and new regulations, and new ‘simple English,’ as the SEC put it, in terms of a kind of framework. So, what we want to do is create a subcategory or just a very specific category within the Blockchain Compliance hub, specifically talking about STOs and digital assets. If there are any community members out there who have a specific interest in securities laws, we’re happy for them to submit.”

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.