Tokeny has just announced the European launch of their anticipated identification services. Increased adoption of, and acceptance towards, digital securities is being witnessed across Europe. This means that services such as investorID are imperative to maintain adherence to enforced regulations.
The digital security sector does not reside in relative anonymity to the extent that cryptocurrencies do. The entire lifecycle of digital securities is tracked right from their creation, to their distribution, and trading.
Part of the reason that the sector is gaining acceptance so rapidly, is because of the ability to enforce compliance and regulations upon industry participants. A major step in achieving this is simply knowing who these participants are. InvestorID is a means of establishing identify in a digital world.
While the appeal of digital securities is broad, the fact remains that access to this nascent asset class is limited at this point in time. While the average investor will eventually gain access to digital securities when they arrive on the various secondary markets under development, they do not have that access now.
The distribution of digital securities entails adherence to strict regulations, including restrictions on which investors are given access. This means that, typically, only investors which meet certain qualifications can take part in STOs, DSOs, etc. In order for the issuing companies to be confident that they are only distributing tokens to the appropriate investors, a digital identity is needed. InvestorID creates this digital identity. In doing so, STO token issuers can rest assured that they have not breached any rules.
Luc Falempin stated,
“By creating investorID, issuers can act in full confidence that their securities are being accessed and traded compliantly. There wasn’t a solution on the market that accurately identifies the different stakeholders on the blockchain infrastructure, but it is a mandatory piece in order to apply securities laws in Europe…On the buy-side, it’s fundamental for investors to know they are respecting the necessary rules and regulations in relation to security trading. InvestorID relieves this worry and enables individuals and financial institutions to seamlessly create their on-chain and validated identity. This allows investors to trade tokenized securities in total confidence.”
Tokeny is not alone in recognizing the need for identification services tailored toward the digital securities sector. Racing alongside them are multiple services under development – one of which is offered by KABN.
The service, known as ‘KABN ID’, is one in a suite of services offered by KABN – each built with the intent on remaining compliant with regulations.
Tokeny is a FinTech company that was founded in 2017 out of Luxembourg. Since the time of their formation, Tokeny has strived to develop a comprehensive offering for security token issuers and investors alike.
Company operations are over seen by CEO, Luc Falempin.
In Other News
Beyond investorID, we have recently touched on alternative identification services being offered. Check out the articles below to learn a little bit about not only Tokeny, but the competition.
Christian Platzer, Co-Founder & Managing Partner of Black Manta Capital – Interview Series
As a senior HR professional, managing director, and as a consultant, Christian has broad experience from startups to a global enterprise (Groupon). He managed complex international teams in high growth environment, operating in 30+ countries. He lived and worked in Berlin, Zurich, Sydney, and Vienna. Christian is passionate about startups, talent management, people operations, and organisational design.
Outside work, Christian likes to eat well, travel often, and dive hard. He is based in Malta.
How did you first personally come across cryptocurrencies?
I kind of stumbled quite late into crypto: in 2017 during a consultancy project, and finally out of curiosity. For my Co-Founder Alexander Rapatz and me, creating Black Manta Capital Partners was and is more about the adoption of blockchain capabilities in the wide realm of securities, “real world assets”, rather than widening the field of crypto currency adoption. That said, being able to invest both in fiat and crypto currencies on the Black Manta Investment Platform is at the core of our value proposition.
What inspired you to launch Black Manta Capital Partners?
Our very first business idea circled around tokenized funds. We have a broad and deep experience in venture funds and private equity in our team. Yet, when we analyzed the market closely the question remained: who is going to run all those STOs we’d like to invest in? Setting up a single STO as a company is a complex and lengthy endeavour; you have to bring a lot of services together for one offering. In the end, you still have to face the financial regulator for the whole package. This is not easy. Hence, we came up with Tokenization as a Service® on a Multi-STO-Platform.
Crowded? I beg to differ. There are indeed many FinTech players in the space, that provide tokenization engines. Then some players went for niche jurisdictions like Liechtenstein or into a London sandbox. But licensed Financial Services Institutions in major financial markets like Germany, we do not see too many. In that regard, we are very pleased and encouraged that we were able to convince the German Financial Regulator, BaFin, to grant their permission to us.
What types of products can be tokenized on your platform?
This is another way how the Black Manta Investment Platform will differentiate from what we see on the market so far: step by step, STO by STO, we will develop a broad portfolio from real estate to startups and small and medium sized enterprises, from commodities to tokenized funds. We want to give investors, both retail and professional ones, the options to diversify their STO investments on one platform. At the same time all our issuers will benefit from an existing and growing pool of registered investors.
Why should startups or small businesses choose to tokenize versus more traditional fund-raising methods such as venture capital?
For us, we do not see it as an either-or, nor is a Security Token Offering the magic bullet of fundraising. If you are planning a seed round, you might be well served with a venture fund or business angel, its connections and expertise. If you are a grown-up startup that is looking at a series B or C round or an established SMB, that has a track record in the market, you might be much better served with a STO. In the end, it boils down to the fact that as the issuer of a Security Token, you are highly flexible in structuring your capital and you gain access to a highly international financial market.
You recently partnered with Tokeny to launch a ‘Multi-STO Platform’. Could you share with us some details regarding this partnership and what it means for potential clients?
We see Tokeny Solutions as the European leader in the field and for sure one of the top global players. Their platform has a proven track record, is stable, and has met regulatory requirements. In our partnership, we both focus on what we do best: Tokeny the FinTech on Blockchain part, Black Manta Capital the part as a licenced Financial Services Institution. For the client, we’d like to think you get the best of both parts. And apart from that, we simply enjoy working with these guys in Luxembourg.
For potential clients who may be interested in your services. Are there minimum capital or other financial requirements?
In general, we see a minimum capital target of EUR 5 million. In some cases, we will run a smaller first round, but these will usually prepare the market for a bigger round two.
Do clients pay up front or are fees collected from the revenue that is generated?
Our services for structuring and placing the offer require a retainer for the financial and technical setup and a success fee on capital raised. Both parts of the fee are tailored to the complexity of the project, the type of asset to be tokenized, and the estimated sales and distribution effort for the placement itself.
Are there any current projects in the pipeline?
The Black Manta Investment Platform will start in the first quarter of 2020 with two real estate projects in Germany. After those, we are looking at a long list of offerings and different kinds of tokenized assets, but for them it is still too early to make announcements. It is important to know that within the European Union’s freedom of services and the so-called MiFID-II directive, we are able to execute STOs all over Europe, based on our German license.
Is there anything else that you would like to share about Black Manta Capital Partners?
Finally, one question I get a lot is: why Black Manta? And the simple answer is: I am a passionate diver and Manta Rays are not only the fish with the biggest brain power, they are simply majestic and it is mind-blowing to meet them in the deep blue.
GreyP Scores with NeuFund STO – Black One Entertainment On Deck
While never intended to be a financially large scale STO, the event was important, as it demonstrated the effectiveness and potential for digital securities to change the way smaller, private companies raise capital.
Just prior to the launch of the STO, we detailed the events which made it possible. In the following article you can learn more about the clearance given to NeuFund by the FMA, and what it means for the platform, moving forward.
Due, in large part, to their successes, NeuFund continues to see strong growth in their client base. The company indicates that their platform investor pool now totals great than 11 thousand individuals. This growth should result in a snowball effect, as issuers are attracted to the platform due to the scope of investors. More STOs will then draw in more investors – and the cycle continues.
Details of the Raise
With regards to the GreyP STO, there were various positive figures that came out of the events. The following are a few of the details surrounding participation:
- 1017 participating investors
- Hailing from 34 different countries
- €4million raised
- Represents 179% of the target cap
This early in the developmental stage of the digital securities sector, any successful STO is an important feat. With every positive and negative experience, industry participants can adapt and grow. Recognizing the importance of the GreyP STO, Zoe Adamovicz took the time to comment by stating,
“It’s an exciting day for Neufund and huge step forward for the security tokens industry at large. We have proven that private companies can effectively utilize blockchain IPOs, whilst lowering the barrier to entry for retail investors. Neufund is the future of stock exchanges.”
Speaking with Zoe
Earlier this year, we were able to complete an exclusive interview with the CEO of Neufund – Zoe Adamovicz. In this discussion, we learn more about NeuFund, themselves, as well as the views of Adamovicz herself.
“Blockchain is one of the greatest opportunities we’ve been presented with in modern history. Decentralization is ultimately about equalizing opportunities, so a young entrepreneur from the third world receives the same access as a wealthy investor. Building solutions that perpetuate the mistakes of existing markets solely for the purpose of increasing revenues is not enough. We, as a Blockchain community, can and should do better.”
Operating out of Croatia, GreyP is a tech company, which was founded in 2013. Above all, the team behind GreyP is working to redefine ‘smart mobility’. This technology has led the company to utilize e-bikes as a development platform.
CEO, Mate Rimac, currently oversees company operations.
Maintaining headquarters in Berlin, Germany, NeuFund is a popular digital securities issuance platform, which was founded in 2016.
CEO, Zoe Adamovicz, currently oversees company operations.
In Other News
NeuFund has also announced their follow-up to the successful GreyP event. This will see Black One Entertainment look to repeat this success in early 2020. While a firm date has not been announced for this STO, more information can be found in the company’s pitch deck, HERE.
Aaron Kaplan, CEO of Prometheum – Interview Series
Prior to Prometheum you were the Founder of EquityArcade, a platform that enabled consumers to buy shares in video game startups. Can you let us know how your experience at EquityArcade transitioned over to Prometheum?
EquityArcade was a Reg CF equity crowdfunding platform that allowed consumers (investors) to invest in the future revenue generated from indie game funded on the platform. Reg CF is part of the JOBS Act, which also contains the Reg A+ crowdfunding rules. Prometheum uses Reg A+ as a means to allow the general public to invest in blockchain securities. All JOBS Act regulations relate to online equity crowdfunding. As a result, we have been able to leverage many of the experiences and lessons from EquityArcade in building Prometheum’s Reg A+ offering platform.
Prometheum enables companies to raise capital by offering their own Smart Security Tokens (SSTs). Can you share with us how SSTs differentiate themselves from other industry standards such as STOs (Security Token Offerings) or DSOs (Digital Security Offerings)?
SSTs, STOs and DSOs are all different protocols that are attempting to solve the same problem. Until there’s complete regulatory clarity around certain critical components – including custody – of the blockchain securities ecosystem, it’s not possible to conclude which protocol provides the best foundation.
What’s the process for a company to launch an SST?
An issuer looking to issue a SST will submit an application for an offering to Prometheum. At that point, the issuer will submit all relevant documents that will allow Prometheum to conduct the requisite due diligence in order to determine whether the company is qualified to issue an SST. Upon passing the due diligence process, the issuer will complete the Reg A+ offering circular and submit that document to the SEC for qualification. Once qualified by the SEC, the offering will be listed on Prometheum’s offering platform and begin their capital formation activities. When the stated amount of capital is raised, there will be a closing and distribution of the SST into the investors’ Prometheum brokerage account. Upon distribution of an SST, Prometheum’s issuance platform coordinates the multi-signature, multi-stage process that is used to place investors’ SSTs in either their Master or Personal Wallet. Once the distribution occurs, Prometheum will list the SST on our retail based (i.e. open to all investors) Alternative Trading System (ATS), and secondary market trading will begin in the issuer’s SST.
What type of fees should companies expect from launching an SST and hosting it on your platform?
Our goal is to allow companies to raise up to $50m in the most efficient way possible: faster, less expensive, and easier than any other legal capital raising method. In terms of direct fees, we plan on charging issuers a small percentage of the total amount they raise (1-3% dependent on the total raised). Once a token has been distributed and is trading on the ATS, companies are charged a quarterly membership fee of $2,500 for maintaining their order book.
Indirect fees not charged by Prometheum can vary and are related to legal and prep for the creation of the Reg A documents, accounting, auditing, marketing, and other possible professional services.
SST will be Reg A+ issued. For investors who are not familiar with this legislation and what does it mean? Could you explain the benefits?
Regulation A+ allows issuers to raise up to $50 million from the general public annually, and such securities, when issued, are freely tradeable on a secondary market. Reg A+ is really the perfect regulation for issuing blockchain securities as it meets the spirit that was initially conceived by the crypto community- it allows the general public to invest, and the asset is freely tradeable upon distribution but in a regulated manner (unlike many historical token investments).
Tokens that are created on your platform will then be tradeable on a custom ATS (Alternative Trading System). Could you elaborate on how your ATS will operate?
On the surface, the ATS operates just like a traditional equities electronic market. Every token has as order book representing supply and demand for that token – bids (what buyers are willing to pay, and the number of tokens they want) and asks (offers to sell, or what sellers are willing to sell for, and the number of tokens they want to sell). This order book is managed by the matching engine which uses an algorithm to arrange the bids and asks into a price, upon the price quote the engine then utilizes time priority, and ultimately “matches” buyers and sellers when they meet at the same price. There is an online trading platform, similar to Etrade or Schwabb, which allows traders and investors to see the order book, look at charts, enter orders and see their account status and previous transactions. Through the use of omnibus accounts, other broker-dealers will be able to offer their customers access to SSTs. Our ATS intends to operate 2 sessions everyday, both 11 ½ hours long with two 30 minute breaks for settlement. When there is an executed trade, meaning an order between a buyer and seller is matched, the trade is written to the blockchain, as well as recorded to a database to ensure compliance with traditional record keeping.
Are SST tokens launched on your platform tradeable on regular security token trading exchanges such as OpenFinance and tZERO?
SSTs are compatible with Prometheum’s ATS and work as both securities and utility tokens in the Prometheum ecosystem. It may be possible for SST issuers to create a bridge to other exchanges or blockchains by building smart contracts on the Prometheum Utility Blockchain. As the equivalent of a national market system for digital assets develops it will likely be necessary for digital assets to have the ability to trade across security token exchanges and alternative trading systems.
What are Ember (MBR) tokens and what role do they play in this project?
The Ember SST fuels all SST transactions and allows holders to provide services at the protocol and application layers. Prometheum’s Ember token has both profit-making utility (work/access) and proprietary payment currency features. Ember provides the fuel for the Prometheum blockchain Network and demonstrates the versatility and value provided by a modern approach to using securities to transfer value in a decentralized, blockchain based environment. Ember is the first SST issued on the Prometheum Blockchain and sets the legal and technical precedent for further SSTs.
It seems like you are building everything from scratch, why not use an existing blockchain?
The Prometheum blockchain is required in order to ensure that regulatory requirements are met while also providing a viable method for the use of blockchain securities as utility tokens. This includes direct interaction with distributed applications as well as processes for moving blockchain securities in and out of brokerage accounts when a user wishes to trade them on the Prometheum ATS.
Is there anything else that you would like to tell us about Prometheum?
Prometheum is creating the market infrastructure needed for digital assets to go mainstream. When the SEC essentially declared that tokens were securities in the 2017 DAO report, such infrastructure didn’t exist, which meant that there were no compliant facilities for the issuance, trading, clearing, settlement and custody of token securities. Prometheum sought to fill that void and is creating the infrastructure that will allow the general public to invest and trade in digital assets, while also providing mechanisms for clearance, settlement and custody after trades are made. The Prometheum Network is meant to allow the general public to participate, which is required in order for digital assets to go from a new asset class to a mainstream asset class.
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