This is the 11th post for the weekly series on the state of securities with a focus on fintech, Bitcoin, blockchains & distributed ledgers.
Here are some of the key developments, stories & updates from the digital securities industry over the past week.
“BitBond and Klickown to Tokenize German Real Estate”
On December 16th BitBond and Klickown announced their intentions to facilitate the tokenization of real estate as early as January 2020. The way this will work is that digital bonds will be issued that are backed by German real estate on the Stellar blockchain. Bitbond’s CEO stated, “We see a tremendous demand from financial service providers and issuers to digitize the bond issue process. With our technology, we enable tokenized proof of ownership of securities, while reducing the number of intermediaries required.”
As securities continue to be tokenized they will continue to flow much more efficiently than they have in the past without unnecessary bottlenecks. Bitbond was part of the first regulated Security Token Offering (STO) in Germany, so it will be interesting to watch their developments in the space throughout 2020. Securities.io article going into detail about this announcement by Bitbond & Klickown.
“State Street and Gemini Launch Digital Asset Pilot”
Gemini recently announced that State Street has chosen them for their new digital asset pilot. As a part of this financial institutions will now be able to custody their digital assets with Gemini and then receive reporting for those assets with State Street. As Tyler Winklevoss states in his Medium article about the development, “This pilot will initially support the custody of bitcoin and ether at Gemini; with State Street providing the back-office reporting. However, it is extensible to other digital assets, such as tokenized securities, in the future.” State Street is one of the largest custodians in the world and as more investors are getting exposed to digital assets, they want to ensure they have solutions available for their customers. Here’s the full medium article from Tyler Winklevoss about this development with Gemini and State Street.
“SEC Proposes to Update Accredited Investor Definition to Increase Access to Investments”
On Wednesday the SEC voted to propose amendments to the definition of accredited investor, “one of the principal tests for who is eligible to participate in our private capital markets.” This proposal would allow more investors to get involved and update very outdated restrictions. Chairman Jay Clayton stated, “Modernization of this approach is long overdue. The proposal would add additional means for individuals to qualify to participate in our private capital markets based on established, clear measures of financial sophistication.” This proposal is subject to a 60-day public comment period, so it will be interesting to monitor this development by the SEC. Here’s a link to their full press release on the proposed change to the accredited investor rules.
“Stratis launches Security Token Offering Platform”
Stratis announced on December 20th that they have launched their Security Token Offering (STO) platform. This will allow businesses to raise capital “by issuing legally permissible, asset-backed securities on its native blockchain.” About this development Stratis’ CEO had to say, “Our STO platform is highly secure, flexible, and scalable, making it easy for businesses of any size to raise money through the tokenization of their asset.” This is an interesting development leading into 2020 and it will be interesting to follow along in the ever changing digital securities industry. Yahoo Finance article on this announcement by Stratis.
“EY Launches Token and Smart Contract Testing Service in Open Beta”
Ernst & Young recently made their token and smart contract review service available for public beta. This is a great way for investors to ensure that their security tokens follow industry standards and there are no hidden bugs in the code that could create a vulnerability for them. EY’s global blockchain lead Paul Brody in discussing the development stated, “We don’t run enterprise computing systems without anti-virus tools and it only makes sense to run blockchain-based investment systems with smart contract and token testing tools.” In an industry that unfortunately has many scam and fraud-ridden projects, this will hopefully be able to help reduce the risk for some investors. Yahoo Finance article on this development by EY regarding their token testing tool.
That’s all for this week, check back in next week to learn all about what’s happening in the rapidly evolving digital securities industry! Feel free to leave any comments below & if you’re interested in following this weekly roundup be sure to click on “Notify me of new posts by email” underneath the comments box below to receive an alert for each new post.