The Security Tokens Exchanges Are Coming!
With Circle / Poloniex, reportedly entering the space, liquidity is the next piece of the tokenized securities puzzle.
Yesterday, Goldman-backed Circle acquired crypto exchange Poloniex, and in an interview, its founders said
“We envision a robust multi-sided distributed marketplace that can host tokens which represent everything of value: physical goods, fundraising and equity, real estate, creative productions such as works of art, music and literature, service leases and time-based rentals, credit, futures, and more,”
Security tokens are here to stay, and 2018 is shaping up to be the breakthrough year for the tokenization of securities and assets.
Only 6 months ago (a half lifetime in crypto land) SPiCE VC was one of the world’s very few security tokens to be announced, but our vision was loud and clear — we knew this was a market waiting to explode, an opportunity to liberate trillions of dollars worth of non-liquid assets and have them raise capital and trade on the blockchain.
Fast-forward 6 months, our portfolio company Securitize is offering an end-to-end tokenization platform and service with dozens of issuers in the pipeline eager to issue billions of dollars worth of security tokens, and the market is starting to materialize in front of our eyes.
The next piece of the puzzle are the exchanges — where will these security tokens trade? current blockchain exchanges are still not equipped, or do not have the required licenses to support trading of securities, so this is where the next effort is concentrating, and this, I believe, is the strategy behind the Poloniex acquisition, a move that will no doubt impact the plans of other exchanges.
I believe this was a classic case of “a chicken and egg”. Exchanges didn’t support security tokens, because there were no security tokens to support. But now that is changing. Fast.
So what came first, the chicken or the egg? clearly the egg (considering dinosaur eggs existed millions of years before the first chicken…), so as security tokens are now ready to launch en mass, so are the liquidity solution designed to support them.
Here are some of the companies that have publicly announced upcoming liquidity solutions:
Bancor is a liquidity solution for security tokens that exists today. It will be used for the SPiCE VC token, and offered to Securitize issuers too. The advantage of the Bancor model is that it allows investors to sell tokens directly back to the issuer without having to find a buyer on the other side. A Bancor relay with the equivalent of 3% of the capital raised, can usually provide better liquidity than most exchanges can provide for small coins, with much less price fluctuations. Here is an interesting read about the growth of the Bancor network.
For more information: www.bancor.network
tZero, a subsidiary of overstock is now raising it’s own security token ICO, with the intent of launching a security token trading platform. One of the advantages tZero has, is that it owns two SEC registered and FINRA Member broker-dealers, SpeedRoute LLC, a premier routing and execution firm, and PROSecurities LLC, registered as an Alternative Trading System (ATS) , which is the first SEC and FINRA regulated ATS to enable and support secondary trading of a crypto security.
For more information: www.tzero.com
BnkToTheFuture is a successful online investment platform with almost 50,000 professional and accredited investors with over $260 million invested in the funding rounds of FinTech, Bitcoin, and blockchain deals listed on its platform including Kraken, BitFinex, BitStamp, and Shape Shift. BnkToTheFuture has recently finished its own ICO with the goal of establishing a platform for the trading of security tokens during 2018.
For more information: bnktothefuture.com
GBX — The Gibraltar Blockchain Exchange
A subsidiary of the Gibraltar Stock Exchange, and supported by the local regulators, the Gibraltar Blockchain Exchange has announced multiple initiatives for enabling the trading of tokens. One of them, the GSX, is specifically designed to become a world leader in Tokenised Securities, giving birth to a whole new level of access, liquidity, and transparency in the capital markets.
For more information: https://gbx.gi/
Templum has recently acquired Liquid M Capital, which has an alternative trading system. With that platform, Templum will provide liquidity for tokenized securities in compliance with US security regulations. The company raised $2.7M seed round.
For more information: TradeTemplum.com
And this is just the beginning, blockchain based security tokens deliver so many advantages and efficiencies, that the market simply has to adapt, we’re seeing the first movers now, but I believe the market will start moving in this direction in force later in the year.