Today, Securitize launched its secondary market trading platform for security tokens, Securitize Markets, almost a year after acquiring DTM, the alternative trading system (ATS) registered with the FINRA and a broker registered with the SEC. The delay is probably due in part to regulatory approval.
Securitize has attracted many reputable funders including Santander, Nomura, MUFG, SBI and Sony Financial Ventures. Blockchain Capital and Morgan Stanley Tactical Value co-led its $ 48 million Series B fundraiser in June.
The digital asset company started out by providing a compliance platform to turn stocks or other assets like real estate or funds into tokenized securities. It sounds pretty straightforward. However, with private inventory there are often restrictions on who the inventory can be transferred to. The solution supports compliance classifications such as whether an investor is considered accredited.
Security tokens promise to transform multiple markets such as private stocks, bonds, and real estate by opening them up to a larger investment pool. Issuance costs are lower and trading tokens allow near instant settlement, remove counterparty risk and reduce post-trade processes.
However, private stocks are notoriously illiquid, and turning them into tokens doesn’t magically add liquidity. This is especially the case because many security tokens issued to date are not listed in leading markets. This is a key issue that the launch of Securitize in the secondary market aims to address.
Tap the dots to keep businesses private much longer than in the past.
“The focus on IPOs is misplaced. Today, wealth is generated by investing in start-ups, not mature businesses. But most investors have been excluded from these opportunities so far. Securitize Markets aims to give many more investors access to alternative investment opportunities, with the aim of increasing the liquidity of the private markets as a whole ”, said Carlos Domingo, CEO of the parent company, Securitize .
This is very true, but in many cases private stocks have restrictions on investor net worth.
“Securitize Markets is the latest critical piece in creating the world’s largest fully digital, end-to-end regulatory compliant solution for raising and trading private capital,” said Domingo.
The company says that instead of spending a lot of time raising money from venture capitalists, CEOs can issue shares that customers, fans and partners will buy. However, in many cases, stocks are likely to be limited to the wealthiest investors.
Security tokens look promising in a number of markets. In terms of stocks, some private companies have already grown to size and will attract a large number of investors if they offer security tokens. Many others are less obvious. For every Facebook or Coinbase pre-IPO, hundreds or thousands of businesses will fail, trudge ahead, or experience moderate success.