We have noted and commented, on various occasions, that the digital securities sector is seeing an influx of interest from industries that greatly vary.
We are now greeted with news that World Chess is looking to host a ‘hybrid IPO’, which will see the sale and distribution of security tokens as a precursor to an eventual IPO.
This offering stands to be particularly unique, as it is being called a ‘hybrid IPO’. What this will entail, is a multi-step capital generation process, which will utilize, both, traditional means of raising funds alongside an infusion of blockchain technology.
With the help of Algorand and Securitize, World Chess CEO, Iyla Merenzon, has announced that the company will be hosting an STO shortly. This is a first step towards preparing the company for their eventual IPO and entrance into E-Sports.
In the upcoming STO, it is expected that World Chess will be selling roughly 5% of their company represented by security tokens. Investors will retain the ability to convert these tokens into traditional shares once an IPO takes place. Due to the infancy of the digital securities sector, investors/early adopters in the tokens are expected to gain access at a ‘discount’ when compared to an expected IPO share price.
With the rise of E-sports in recent years, chess stands to benefit. This potential for growth, and introduction to new markets, is the reasoning behind the decision to host a hybrid IPO.
Ilya Merenzon indicates that the funds generated from the event will be used to support the growth and adoption of chess within E-sports.
History of Chess
Not many games manage to persevere through the ages, retaining an audience. Most are a product of their time, and simply don’t age well. Chess, however, is not one of these.
Arguably the most well-known game throughout the world, Chess saw its beginnings in India over 1400 years ago. Discoveries regarding its origins are still being made today, with reports of what is believed to be the oldest surviving chess piece recently surfacing.
The love for Chess remains today, as the game has become viewed as historically and culturally significant. This has resulted in a lucrative collectors market surrounding the game – recently made evident by the discovery of a Chess piece valued at $1.3M.
The game itself is not simply a relic which remains popular due to its historical significance. Today, there remains an active population of players, with a few being true masters of the game.
As with most sports, there are usually one or two players in each generation that stand apart from the rest as true masters. Magnus Carlsen – the current chess world champion – is viewed by many as such a player.
Magnus Carlsen is a 28 year old Norwegian, who first became world champion at 22 years of age. To learn more about his unique and fascinating mind/skillset, streaming giant Netflix hosts a documentary detailing the champion.
A Quick Look at – The Security Token Market Secondary Trading Analysis: 2019
This week, the Security Token Group released its yearly comprehensive study – The Security Token Market Secondary Trading Analysis: 2019. The study provides direct insight into the current state of security token adoption. Additionally, it sheds some light on the major hindrances encountered by investors looking to participate in the secondary market.
The study produced some interesting data. For one, the stats revealed a lack of progress on multiple fronts concerning security token adoption. The report highlighted areas of concern ranging from a lack of understanding surrounding the new technology, all the way to postponements due to regulatory approval. Perhaps the most glaring piece of data the report confirmed is a surprising lack of global investor demand for these regulated tokens.
Security Token Market Secondary Trading Analysis: 2019
As part of the Security Token Group’s comprehensive approach towards the market, researchers chose to evaluate all international jurisdictions. In this manner, the report is able to reflect a global metric of the market’s performance over 2019. This approach provided much-needed insight into the overall health and performance of the secondary markets internationally.
2019 STO Secondary Trading Market Overview
As one of the first reports published regarding 2019’s security token secondary market progress, readers are privy to a huge amount of previously unknown data. For example, the report indicates that the secondary security token market peaked in January at $229,501,221.25. Interestingly, this peak is the direct result of tZERO‘s TZROP preferred equity token trading.
Notably, by the end of the year, the secondary market experienced a 67% decline with December’s market cap at only $76,062,199.46. Currently, the total volume for the secondary markets is around $2,410,607.94. This volume breaks down into a monthly average of $214,682.90 or broken down even further, a daily average of $7,156.10.
Despite a flourishing STO market, 2019 only saw three security token exchanges go live. Interestingly, all three exchanges meet US jurisdictional compliance requirements. This data proves the growing desire of blockchain firms to enter the US markets. The three exchanges that went public in 2019 are tZERO, OpenFinance Network, and Uniswap Exchange.
The tZERO exchange entered service in January 2019. At that time, tZERO only hosted one security token, the TZROP preferred equity token. Despite the lack of variety the platform provided, tZERO maintained the highest market cap all year. As such, tZERO represented a remarkable 58% of the entire secondary market cap. Consequently, TZROP is the largest token in the industry to be traded over 2019. In addition to the most activity, TZROP also receives the title for being the most consistently traded security token on secondary markets regarding daily volume.
The OpenFinance Network opened its doors a couple of months after tZERO in the first quarter of 2019. Unlike the competition, OpenFinance managed to provide investors with a selection of security tokens to trade. As of December, the exchange trades five live security tokens: Blockchain Capital, Lottery.com, SPiCE VC, 22x Fund, and Protos Asset Management.
Uniswap opened later in the year. Uniquely, this exchange focused on real estate-backed security tokens. The exchange hosted three RealT tokenized properties in Detroit, Michigan. Since Uniswap primarily trades real estate tokens, the exchange provides investors with a host of new and unique investment opportunities. Importantly, analysts see tokenized real estate as having unprecedented upside potential.
Security Token Market Secondary Trading Analysis – 2019
The report also shed some light on the pace at which these tokens gained popularity. Notably, the start of 2019 was strong. Importantly, there were five live security tokens trading in Q1. Despite the strong start, most of these tokens did not see daily trading. In fact, the report revealed the vast majority of security tokens only experienced a few trades per month.
Security Token Market Secondary Trading Analysis Reveals Two Truths
After reviewing all the data presented, the Security Token Market Secondary Trading Analysis proved two important points regarding security token activity on the secondary markets. One, it showed that security token infrastructure is beginning to permeate across traditional markets. This adoption is evident as many of the world’s largest institutions decided to trial blockchain tech as an alternative to the current business systems surrounding transactions and settlements.
This decision makes sense when you consider the improved efficiency and reduced costs a company gains from the integration. As examples of major institutions seeking to enter the security token sector, the report lists Santander Bank’s latest blockchain venture. Also, the tokenization of a $700B asset management firm by Franklin Templeton and Deutsche Boerse settling digital securities trades on-chain are listed.
The second, and perhaps most important takeaway from this report is that most retail investors (crypto and traditional) don’t have much interest in the current batch of security tokens on secondary markets. This lack of interests translated into the lackluster performance of most of the security tokens examined.
This dismal investor participation can be attributed to a number of causes. Analysts pointed to regulatory roadblocks, investor fatigue, and low expected returns as some of the main reasons behind the lack of participation. In turn, this disinterest translates into trading platforms struggling to provide much-needed liquidity to the sector.
Future Looks bright
While the Security Token Market Secondary Trading Analysis proved that there is much work to be done in the space, it also demonstrated that the market is developing slowly. Notably, the report showed that there are over 60 security token exchanges slated for launch in 2020. These exchanges span the globe including the United States, Canada, United Kingdom, Germany, Liechtenstein, Estonia, Netherlands, Switzerland, Gibraltar, Malta, Seychelles, Belarus, British Virgin Islands, Singapore, China, Philippines, Antigua, Jamaica, Barbados, Cayman Islands, Mauritius, United Arab Emirates, and Greenland.
Security Token Market Secondary Trading Analysis – A View into the Future
You really have to hand it to the Security Token Group. This team managed to put together a treasure trove of valuable information that is sure to help guide investors and organizations moving forward. For now, those interested in a geographic breakdown of these statistics can find the info here.
Oklahoma Lawmaker Nathan Dahm Sponsors Bill 1430
On Jan. 15 an Oklahoma Lawmaker by the name of Senator Nathan Dahm introduced Senate Bill 1430. The goal of the bill is to facilitate the creation of a state-chartered financial institution focused solely on digital assets. The newly created crypto depository would be exclusively for government use. Additionally, the depositary would take up the responsibility of providing financial and technical services to government offices utilizing digital assets.
According to recent reports, Senator Nathan Dahm sponsored the bill in a bid to get further blockchain integration into the government. Importantly, the bill will see a Feb. 3 first reading. Notably, this is the latest of three crypto-related bills Senator Dahm has brought forth over the last year.
Oklahoma Has Some Pro-Blockchain Officials
Senator Dahm has been one of the most active politicians in the space. His vocal support for the creation of a functioning and enforceable regulatory framework for tokenized securities received heavy media coverage throughout 2019. For example, on Jan. 25, 2019, he introduced Senate Bill 843. The bill borrowed many aspects from HB 70 that was passed by the Wyoming legislature last year. The overall goal of the new legislation is to help differentiate between open blockchain cryptocurrency transactions and tokenized securities. Unfortunately, there has been no further action taken on this bill.
Additionally, Dahm co-authored Senate Bill 700. This bill focuses on digital signatures and their use within the digital economy moving forward. In essence, the bill modifies the definition of an electronic record and electronic signature to fit the coming digitization of the economy.
Senate Bill 1430 – Oklahoma
While both of these bills could have far-reaching ramifications for crypto use within the state, his latest venture is by far his most advantageous. Senate Bill 1430 Dahm’s authorizes the State Banking Department and the Oklahoma Department of Commerce to work together to research, formulate and develop a new-age financial institution. This state-chartered digital asset bank is to function as Oklahoma’s primary central depository for all virtual currencies used by agencies within the state.
The new financial institution must meet some stringent requirements before its official opening. For one, the bank must integrate into existing banking and financial institution regulations. Also, the institution must encompass the highest level of expertise. In this way, the firm may provide valuable financial and technical services to blockchain and virtual currency innovators and developers moving forward.
Oklahoma – A Blockchain Haven?
These latest development highlight the unbalanced approach by state officials towards blockchain technology. Oklahoma continues to lead the pack in terms of legislation aimed at integrating this game-changing technology. This latest bill should help safely grow this innovative technology within the state.
The data gathered to date surrounding the market will help in the development of next-generation financial products in the future. As it stands today, the plans and implementation strategy submission must occur by July 1 in order for the bill to become effective by Nov. 1, 2020.
Oklahoma – A Step Ahead of the Pack
The decision of lawmakers such as Dahm to continually push for more blockchain adoption is a smart maneuver. The state could see an unprecedented upside if it becomes one of the first to provide a strong regulatory framework to the blockchain space. For now, lawmakers like Dahm continue to push for stronger regulations to promote the adoption of this revolutionary technology.
MEDsis Partner WTIA to Launch Kfinancial
The next-generation blockchain financial platform, MEDsis International announced a strategic partnership with Korean-based WTIA this week. The partnership is part of a broader strategy focused on the launch of the highly-anticipated Kfinancial platform. Importantly, the launch is set to coincide with the company’s upcoming STO.
The partnership and expansion strategy carried out by MEDsis isn’t a complete surprise. The firm announced plans for such a deal way back in December 2018. In the announcement, the company expressed a desire to develop a custom blockchain. In the end, the company decided it was more cost-effective and an overall better approach to partner with the WTIA Korean blockchain to accomplish its tasks.
Interestingly, the partnership strategy continues to take shape. Company officials stated that contracts, financials, strategies, pilot program results, funding, and strategic partnerships will continue to see expansion as the program develops. According to company officials, all of this information will become publicly available through the upcoming KFinancial White Paper.
Discussing the new strategy, Joshua Dax Cabrera, CEO of MEDsis spoke on the years of planning the firm has put into the expansion. The new partnership will provide unprecedented reach for the MEDsis platform moving forward. Cabrera explained that the new approach brings MEDsis’ global payment opportunities to the masses. Additionally, he touched on how the maneuver strengthens the firm’s current partnerships as well.
MEDsis – KFinancial White Paper
The release of the new joint White Paper associated with the STO will shed some light on the project moving forward. For its part, KFinancial will become the stand-alone payments and fintech division of the new joint venture company KFIN WTIA PTE. The new firm will operate out of Singapore. Importantly, Singapore is one of the most blockchain-friendly countries in the world currently.
Billions in Revenue
The merger will bring investors and token holders the direct rights to more than $3 billion in projected revenue. Uniquely, the STO will assign revenue and not equity toward the STO. In this way, investors receive direct access to revenues without previously anticipated equity dilution.
Discussing the merger, WTIA Chairman Keun Kim, explained the motivation behind the decision to partner with WTIA. Kim described the immense benefits obtained through the merger. He explained that the new platform brings the partnership to the world. Additionally, this new level of market confidence will help to further security token adoption globally. He ended his interview discussing the importance of job creation in the markets the firm intends to expand into first. These markets include “Argentina, Brazil, and beyond.”
A Company on the Move
The MEDsis payments ecosystem gained strong positioning in its perspective markets with this latest maneuver. The decision by company executives to focus on the underserved Latin American markets could prove to be pivotal in the space. For now, MEDsis prepares to see their products and services go global as the firm’s STO is set for a May 1, 2020 launch date.
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