Security tokens allow traditional investors to enter the cryptomarket while adhering to current government standards. These tokens are preprogrammed with integrated regulatory requirements. As a result of this integration, security tokens are the perfect fit for the tokenization of certain assets.
Gaining a better understanding of each type of token, and how it functions, helps you to be a better-informed investor. As different assets require different legal requirements, its only natural that different types of security tokens emerged. Today there are four main types of security tokens in use in the market.
Equity security tokens represent ownership rights to a particular asset. These tokens can represent ownership in a physical asset such as a percentage of profits from real estate investments. Additionally, these tokens fit perfectly with digital assets as well. Consequently, this is the most common type of security token in the market at this time.
Bond security tokens provide owners with a fixed income, over a predetermined time period. The best example of this type of token is a fixed loan. The issuer of the loan is entitled to receive their interest and principal payments until the completion of the loan. Bond security tokens make it possible to crowdfund loans.
Real Estate Asset
Real estate tokens come in two varieties. The first type of real estate token encountered in the market represents ownership of a property. Tokenizing real estate provides more liquidity to investors. It also allows for the crowdfunding of investment properties via the blockchain. Harbor is one firm that specializes in these tasks.
The second type of real estate-based security token is a debt-type asset. In this scenario, the rent paid for a particular investment property undergoes tokenization. In this manner, smart contracts can automate the collection and distribution of the rent among the investment parties.
Commodity-based security tokens represent investments in bulk commodities such as gold, silver, wheat, or oil. Tokenizing these items allows more investors to participate in the market. As a result, token holders can rent out their ownership rights to third-parties once they have been tokenized.
SEC Steps into the Market
Recently, the SEC has taken a more hands-on approach to the growing security token marketplace. This increased involvement in the market has created a scenario where companies are now seeking to work for hand and hand with the SEC on their crypto projects.
One example of this scenario occurred this week when the security token platform TokenSoft Inc. invested in a major SEC-compliant broker-dealer. Tokensoft isn’t alone in their proactive approach to this situation. Last week, Satang Corp. revealed plans to host an STO (security token offering) in Thailand with the blessings of their local government.
The 4 Most Common Types of Security Tokens
Security tokens are revolutionizing the way we conduct business on a global scale. These unique blockchain based protocols provide traditional investors with a safe way to enter the cryptomarket. You should expect increased adoption as investors continue to learn about the benefits security tokens provide.
Security Token Issuers to Benefit from alliance of ‘Issuance’ and ‘VStock Transfer’
Issuance partners with VStock Transfer
Just announced today, deal marketing platform, Issuance, has partnered with stock transfer agent, VStock Transfer. This alliance was formed as Issuance saw a need on behalf of security token issuers. This was the ease of token registration and transfer.
As a result, partnering with a transfer agent such as VStock Transfer, allows companies having completed a digital security offering the ability to utilize services and experience based upon decades of experience in securities law.
These teams should be able to hit the ground running, as Issuance CEO, Darren Marble, has had previous experience working with VStock Transfer. Through their ability to provide experience, along with cost saving measures, it’s no wonder why Issuance has partnered with VStock Transfer.
The CEOs of each company discussed the partnership at hand.
Yoel Goldfeder, CEO of VStock Transfer, stated, “As an SEC-compliant transfer agent who has had the pleasure of working with a range of companies from private to pre-IPO issuers to NYSE American, NASDAQ and OTC listed companies, it was a seamless pivot into digital securities…We look forward to working with Issuance, an industry pioneer who will help to fuel the capital raising component for our clients.”
Darren Marble, CEO of Issuance, stated, “As digital securities continue to merge with the capital market infrastructure, support from companies such as VStock Transfer are critical to remain compliant throughout the lifespan of a DSO…We are thrilled to add VStock Transfer to our growing network of strategic partners and provide valuable registry and transfer services for our clients and their shareholders.”
VStock Transfer is based out of Woodmere, New York, where they provide services as an SEC registered ‘stock transfer agent’. The company is spearheaded by CEO, Yoel Goldfeder – a seasoned attorney specializing in corporate and securities law.
For a deeper look at what services VStock Transfer is able to provide, make sure to visit their website HERE.
Issuance was founded in 2018, and is based out of Los Angeles, California. Above all, the main purpose of the company is to act as a bridging platform. For example, this means working to connect investors with appropriate digital securities issuers.
Make sure to check securities.io again for future news on Issuance, as they have indicated future plans to tokenize themselves.
Issuance is rapidly developing into a well-rounded company. For instance, this marks just one of various strategic partnerships announced in recent weeks.
Here is a look at a few of our other articles detailing those endeavours.
Digital Securities Platform DX.Exchange, Survives First Week Scare
Dx.Exchange has had quite the tumultuous week. As the exchange closes its first week of operation, the team behind the project was able to dodge a potentially damaging situation.
From hordes of investors signing up pre-launch, to potentially disastrous glitches, here is a brief look at the problems that plagued week 1.
Details of the Problem
Upon launch of the platform, an anonymous user took it upon themselves to evaluate DX.Exchange. Shockingly, the user found information leaks that could potentially be harmful to a variety of parties.
Information being leaked ranged from password reset links, to names, email addresses, and more. With this, if someone were so inclined, they would be able to create backdoor entrances to user’s accounts.
It isn’t hard to imagine what kind of havoc a malicious individual could wreak.
In an attempt to allay investor’s fears, Dx.Exchange has reached out the public with the following statement.
“We would like to thank the vigilant reporter, and our supportive community, who together with, brought his issue to our attention. We are happy to report that the vulnerability has been successfully patched, and no user funds were compromised. Our launch was met with a stellar response from our community eager to trade cryptocurrencies and digital stocks. Customer funds were always safe, our multi layer advanced monitoring and defense mechanism was able to avoid any further issue.”
This statement came after the company scheduled platform maintenance within hours of the news breaking.
WE SCHEDULED FOR TODAY AT 11:00 AM (ESTONIA TIME ZONE) A MAINTENANCE UPDATE TO IMPROVE OUR PLATFORM FUNCTIONALITY AND PERFORM SEVERAL BUG FIXES AND UPDATES. THE PLATFORM WILL COME BACK FULLY FUNCTIONAL AFTER FEW MINUTES. THANK YOU FOR YOUR PATIENCE
— DX.Exchange (@DXdotExchange) January 9, 2019
Caught out Attention
DX.Exchange originally caught our attention due to the manner in which they offer their services. Rather than hosting digital securities of companies that have decided to tokenize, DX.Exchange has taken a different approach.
They are purchasing traditional shares of publically traded companies, and then issuing their own security tokens to investors, representing ownership of the shares. Due to the method in which this transaction takes place, the shares are held by DX.Exchange. However, investors holding the associated security token receive the full range of benefits associated with them (dividends, equity etc.).
Examples of these companies notably include Apple, Tesla, Amazon, and others.
The CEO of DX.Exchange has stated that due to their licencing and region of operation, the SEC has no means in which to stop them from offering these services.
However, there are many skeptics of the exchange that believe it will eventually face due recourse. Through what means is unclear, but there are certainly going to be companies that do not want their shares tokenized in such a fashion.
DX.Exchange is based out of Estonia, and was founded in 2018. Above all, the company acts as an online exchange, providing investors access to a variety of digital assets.
Prior to the events discussed here today, we recently spoke about DX.Exchange and the companies recent launch. To learn more about DX.Exchange, make sure to read the article below.
tZERO Completes Distribution of Security Token
In a recent press release, tZERO has announced that it has finished distributing their native token. This token goes by ‘TZROP’, and is known as a digital security – representing ownership in tZERO itself.
While tZERO finished the token creation process months ago, per regulations, it was mandated that they remain in lock-up for a 90-day period. During this time, tokens were to be held by a third party custodial service. Finally, this 90-day lockup came to an end on January 10th, resulting in the aforementioned distribution and press release.
This issuance process comes months after tZERO completed a wildly successful security token offering, or ‘STO’. For example, taking place over a roughly 2 month span in mid-2018, tZERO was able to raise $134 million USD. In addition, this raise was made possible through investments seen from over 1000 parties worldwide.
Commentary on the Issuance
Multiple representatives from tZERO spoke on the importance of this token issuance.
tZERO Executive Chairman, Patrick Byrne, stated, “The issuance of the world’s first public cryptosecurity, OSTKP, in 2016 was tZERO’s Chuck Yeager moment: we broke the speed of sound by introducing the concept of real-time trade settlement. Today marks our Yuri Gagarin moment, where we leave behind the confines of the known world of traditional capital markets and take the first steps towards a new market powered by blockchain.”
tZERO CEO, Saum Noursalehi, stated, “This is one of the first Security Token Offerings on a decentralized public network, and was conducted in full compliance with the U.S. securities laws…This is an exciting milestone for tZERO, and we are even more enthusiastic about the opportunities this will create for private and public companies wishing to raise capital through security token offerings, and for investors who wish to trade those securities.”
The next step to be taken by tZERO, and the most anticipated by investors, will be the launch of a trading platform. The company originally launched a prototype of this platform on April 9th of 2018. However, it is anticipated that a full launch will occur midway through 2019.
The launch of this platform will facilitate trading via secondary markets. Thereby, imbuing new levels of liquidity to previously illiquid assets.
We have recently reported on progress being made by tZERO. For instance, here are a look at a few noteworthy events from recent days.
tZERO is based out of New York, and is a subsidiary of Overstock.com. Each are products of Patrick Byrne’s, who has recently noted that he will be increasing his focus on the development of tZERO. Above all, this subsidiary acts as a platform to facilitate various services aimed towards security tokens.
- Osman Sultan, Chief Executive Officer of EITC, will provide a keynote speech at UNLOCK and announce new blockchain initiatives over the course of the two-day forum
- UNLOCK Blockchain Forum announces more than 56 Global and regional Speakers including Blockchain Evangelist Nick Spanos
- Seoul Mayor Confirms to Attend CHAIN PLUS+ Blockchain Summit
- The Billionaire Investor Tim DRAPER is participating at the Blockchain Economy Istanbul Summit!
- European Blockchain Investment Congress 2019 Bringing Industry Professionals, Investors and Startups Together in Vienna
- Security Token Issuers to Benefit from alliance of ‘Issuance’ and ‘VStock Transfer’ January 15, 2019
- Interview Series – Dave Hendricks, CEO & cofounder of Vertalo January 14, 2019
- Digital Securities Platform DX.Exchange, Survives First Week Scare January 14, 2019
- tZERO Completes Distribution of Security Token January 13, 2019
- SharesPost trades Security Tokens on Secondary Markets Platform January 12, 2019