OpenFinance Network: How to build a Security Token trading platform
Which problem is OFN trying to solve?
Currently, there is no single platform for digital asset issuers who would like to become securities and need trading, clearing and settlement for their security tokens. Traditional alternative assets (e.g. Regulation D, Regulation S, Regulation A+, hedge fund, private equity funds) are all traded but in an inefficient and unnecessarily complex manner. Industry issues such as lack of standardized transfers, illiquid markets, and extremely slow and antiquated settlement times are prevalent, costing the sector $80 billion a year. OFN is going to facilitate the transfer of historically illiquid securities in a regulated environment.
2. What is your biggest challenge launching a Security Token trading platform?
We are in uncharted territory, so we had to figure out processes of launching a Security Token trading platform. This includes going through the steps to become fully compliant with U.S. regulators, as well as working with our partners who will be adding their tokens to our platform.
3. What is an investors advantage to buy/sell securities via OFN compared to the traditional way?
OpenFinance Network provides access to tokenized securities and, by offering access, OFN improves liquidity in the market at large. If you want to sell or buy additional asset shares, OFN’s platform is easy-to-navigate where alternative investors can transact.
4. What are my risks holding and trading Security Tokens?
Security Tokens tend to be high-risk, high-reward assets. Much like traditional investing and digital asset trading, those looking to build their portfolios with Security Tokens must be aware of the risks and only invest what they can afford to lose.
5. Who is eligible to buy and sell Security Tokens on OFN?
Anyone with an interest in trading Security Tokens can sign up to trade on the OFN platform. Our investor passport feature will unlock the investment opportunities you are eligible for.
6. When will I be able to trade Security Tokens on your trading platform?
Trading date TBA, but coming soon.
7. What kind of Security Tokens will I be able to trade on OFN?
SPiCE VC will be listed first. Blockchain Capital, Science, Protos, MintHealth, Corl, Bloxroute, and Property Coin, among others, will also be added at later dates.
8. Will I be able to sell Security Tokens I bought via OFN also on other trading platforms?
Only on other regulated trading platforms, of which there are no others to date.
9. Where do you see the biggest advantage of tokenizing securities?
We see tokenization as representative of the broader democratization of finance: making access to capital markets easier for smaller institutions and offering novel investment opportunities for easier for retail investors.
10. Where do you see the Security Token Ecosystem in 5 years?
Middlemen that create friction and add cost to traditional financial transactions will no longer be needed to verify and mediate value exchanges. In this newer, blockchain-based model, transactions can be automated and quickly processed.
I also anticipate Security Tokens continuing to grow over the next few years, especially as SEC regulations are clarified and enforced, potentially replacing the ICO market with STOs.
Thanks for the interview!
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Note: This interview was conducted on 10.10.2018