This week, the popular tokenization platform, Polymath announced the successful migration of the Polymesh blockchain from the Ethereum platform to the substrate blockchain. The move showcases a change in strategy from one of the biggest players in the game. It also highlights the desire of tokenization firms to find a security token-focused alternative to Ethereum.
The news isn’t a huge surprise as Polymath first announced plans to seek out alternative blockchains back in May 2019. At the time, the platform considered the construction of an all-new security token-only blockchain. After months of research, Polymath decided that they had found a better option in the market.
The Substrate blockchain is the brainchild of Ethereum co-founder Gavin Wood. Wood created Parity Technologies specifically to address many of the concerns faced by security token issuers. For example, Substrate supports multiple consensus algorithms. Developers can even program new consensus mechanism into the platform.
Speaking on the move, Parity Technologies chief commercial officer Björn Wagner explained why the decision to go with Parity was simple. For one, the use of multiple consensus algorithms is critical. Polymath developers have long shown concern over the PoW consensus algorithm.
Ethereum’s permissionless Proof-of-Work (PoW) algorithm presents a unique issue for regulated token issuers. Since anyone can mine Ethereum, it raises concerns that transactions could get approval from sanctioned countries. Polymath is keen to avoid a situation where an individual in a sanctioned country earns a profit from approving a Polymath transaction.
Speaking on the decision, Polymath’s head of blockchain, Adam Dossa described how a different mechanism is needed for the large financial institutions Polymath aims to serve. He explained that Ethereum is a “robust blockchain” but that in some instances, it lacks the functionality to fit a regulated environment.
One of the huge advantages that Substrate brings to the table is flexibility. Already, Parity has agreed to build custom regulatory features on Polymesh’s base layer. These new features will make programming advanced smart contracts easier. Additionally, Parity agreed to build communication and runtime modules for the firm.
Substrate’s modular design allows for easier programming and customization. Also, the simplicity of building smart contracts on the platform is a huge plus. Dossa explained that security token smart contracts need to be “flexible to accommodate the wide variety of compliance logic” found in today’s marketplace.
Another point of concern is Ethereum’s history of block reorgs. A Block reorg occurs when developers roll back the transactions on a blockchain to invalidate actions. While extremely rare, Ethereum did roll back its blockchain during the DOA hack of 2016. Ironically, many in the crypto community warned developers that the move would jeopardize the validity of the coin moving forward.
In that case, Ethereum rolled back its blockchain to stop hackers from getting away with millions in tokens. Unfortunately, one rollback is too much when you are dealing with regulated assets and security tokens. These transactions must remain finalized to prevent legal ramifications.
Substrate – Polymath Moving Forward
Currently, both Polymath’s ST20 security token (ERC-1400) and native POLY token (ERC-20) are now live on the new Substrate-based chain. Now, Polymath will seek to improve it’s token’s functionality following the maneuver. You can expect to see more token developments from this firm as developers utilize Substrate’s unique benefits.
iSTOX Builds Upon Recent Successes with a Further $5M in Funding
Capital markets platform, iSTOX, has recently announced the successful attainment of $5 million worth of funding.
This particular sum of capital was generated through a new partnership and investment, with Hanwha Asset Management.
This announcement of further funding comes meres months after the successful completion of the company’s Series A; An event which saw iSTOX draw the attention of various backers which believe in the future of the platform.
Between these two successive instances of funding, iSTOX should be well positioned to continue the development and adoption of their vision; A vision surrounding the potential of digital securities, and their ability to transform capital markets.
To date, iSTOX has managed to attract attention from various high profile companies. The following are a few of these known to have played a role in recent capital generation events surrounding iSTOX.
- Kiatnakin Phatra Financial Group
- Heliconia Capital Management
- Singapore Exchange (SGX)
- Tokai Tokyo Financial Holdings
This grouping of companies is an impressive one, as they represent some of the most influential and progressive ones found in Asian nations.
With regards to the freshly procured $5 million, iSTOX CEO, Danny Toe, took the time to comment. He stated,
“As iSTOX continues to grow, our relationships with partners like Hanwha are allowing us to build a powerful foundation to develop iSTOX into a pioneering service that addresses the evolving needs of 21st century investors…These partnerships will take on an even greater importance in early 2020, when iSTOX transitions into full operational status.”
Founded in 2017, iSTOX not only maintains headquarters, but is regulated within, the nation of Singapore.
CEO, Danny Toe, currently oversees company operations.
Hanwha Asset Management
Founded in 2011, Hanwha Asset Management maintains headquarters in Seoul, South Korea. Since their launch, Hanwha has managed to establish a diverse set of financial offerings, bringing them alongside leaders in the sector.
CEO, Yong Hyun Kim, currently oversees company operations.
In Other News
A successful Series A is an important first step for any company. Not only does this allow for the continued development of a company’s product/service, it indicates that others believe in their vision, as well – at least enough to invest their hard earned money.
US Global Securities to Act as ‘Lead Financial Advisor’ for $50M Raise by Custodial Platform, Koine.
Recognizing the need, and potential, for services surrounding custody of digital assets, Koine has recently announced their intention to host a $50 million equity raise.
The goal of this move is to facilitate, not only global growth, but the expansion of services offered through their platform.
In an effort to ensure their success, Koine has turned to US Capital Global Securities, placing the company on retainer as a ‘lead financial advisor’.
In the past, we have reported on US Capital Global Securities performing similar roles with other companies involved in the digital securities sector. One example of this, was their role as a placement agent in the CityBlock DSO.
While their suite of services offered will surely grow in time, Koine notes the following current capabilities:
- Custody of Digital Assets
- Real-time Settlement
- FIAT storage and payment gateways
- Online Access & API Connectivity
Upon announcing their partnership, representatives from each, US Capital Global and Koine, took the time to comment. The following is what each had to say on the matter.
Hugh Hughes, CEO of Koine, stated,
“Market reaction to Koine’s scalable, institutional-class solution for custody and settlement has been immensely favorable. As we enter 2020, we are focused on driving and supporting international participation in the digital assets marketplace with our applications for regulatory licenses in other trusted jurisdictions, in line with our aim to become the most highly-regulated solution for custody and settlement of digital assets globally…US Capital Global’s proven experience and valuable insight into capital formation, especially in the FinTech arena, will be tremendously beneficial to us at this crucial time in Koine’s development.”
Charles Towle, CEO of US Capital Global Securities, stated,
“It’s an honor to serve Koine as its placement agent and lead financial advisor for this upcoming investment opportunity as we engage selected dealers to expand the distribution of this offering. Koine is driven by an expansive, forward-thinking vision of the digital assets market that we at US Capital Global find very exciting.”
US Capital Global
In operation since 1998, US Capital Global is a well-known financial group, which is headquartered in San Francisco. One of the company’s affiliates is US Capital Global Securities – a broker/dealer licensed under FINRA.
CEO, Charles Towle, currently oversees operations of US Capital Global Securities.
Founded in 2017, Koine maintains headquarters in London, England. Above all, the company is working on the continued development of their suite of services, meant to solve custody and compliance issues within digital securities.
CEO, Hugh Hughes, currently oversees company operations.
As recently as yesterday, we were reporting on developments pertaining to custody solutions in the sector. With rising institutional interest in digital securities, and blockchain as a whole, these custody based solutions are imperative for ensuring a bright future.
Hex Trust Custody Platform made Possible through IBM
Addressing a Common Goal
With rising institutional interest in the world of blockchain, products and services built with security in mind are paramount to ensure continued adoption. With this in mind, IBM, and Hex Trust have recently announced a partnership.
This partnership, which is the product of an MOU signed between the pair in mid-2019, sees Hex Trust building a custody solution for the industry. Development on the project being made possible through the use of Hyper Protect – a LinuxONE based suite of services developed by IBM.
The following is a brief list of only a few capabilities to be offered by the Hex Trust custody solution.
- Reporting and monitoring
- Multi-Factor Authentication
- First & Third party key management
- Hierarchical sub-account structures
Upon announcing their partnership, representatives from each party took the time to comment. The following is what each had to say on the matter.
Alessio Quaglini, CEO of Hex Trust, stated,
“Through our relationship with IBM as a Business Partner Hex Trust has hit a key milestone. Leveraging IBM’s advanced data security and protection features through IBM Hyper Protect Virtual Servers with the dynamic accessibility and scalability, Hex Trust’s proprietary platform will encourage regulated financial institutions to enter the space.”
Ross Mauri, General Manager for IBM Z, stated,
“Data privacy and protection are key concerns for enterprises and customers within the digital asset business…By taking advantage of IBM Hyper Protect Services, Hex Trust can gain the benefits provided by the security and privacy solutions underpinned by IBM LinuxONE, to establish a highly secured platform for their institutional custody solution.”
With digital securities, and similar markets, expected to grow greatly in the coming years, there need to be solutions put into place that safeguard assets. While many retail investors remain quite lax, with regards to the security of their digital assets, institutional players will not fall into this trap. Only once there are sufficient safeguards in place, will they truly enter the market.
Development of such services has begun popping up throughout 2019, and look to continue that trend in 2020. Whether it’s Gemini providing custody services to BlockFi, or Coinbase Custody supporting digital securities such as ‘BCAP’, there is evident growth.
Operating out of New York, IBM has remained one of the world’s most well-known tech companies for decades. While the company has had various specialities throughout the years, they currently have an emphasis on cloud and cognitive based solutions.
CEO, Virginia Rometty, currently oversees company operations.
Founded in 2017, Hex Trust maintains headquarters in Hong Kong. Above all, the company specializes in offering blockchain based custody solutions.
CEO, Alessio Quaglini, currently oversees company operations.
- Canadian Securities Administrators (CSA) Address Crypto-Assets within Regulatory Framework
- SEC Provides Warning on ‘Initial Exchange Offerings (IEOs)’
- New Shore Invest Starts a New Ship Finance Platform
- iSTOX Builds Upon Recent Successes with a Further $5M in Funding
- US Global Securities to Act as ‘Lead Financial Advisor’ for $50M Raise by Custodial Platform, Koine.