While ICO offer no equity, legal sanctuary, and for the overwhelming majority of tokens, the promised utility, ICOs have highlighted the willingness of retail investors to take punts in the tune of billions of dollars on the back of idealized riches (Diar, 24 September).
Last week, Circle continued its expansion drive with the purchase of broker-dealer SeedInvest, an equity crowdsourcing platform. SeedInvest, like all other US based crowd funding platforms, have been able to secure funding for companies from non-accredited investors utilizing securities laws passed after the last financial crisis. Circle has stated that it hopes to incorporate “securities regulation as it applies to crypto…paving the way for security tokens.”
BINANCE Opens all Fronts
Circle is playing catch-up to its competitors on the tokenized securities prospect, however. In July, Binance led a fund round for crowd funding platform Republic, who have proposed an entirely different model to the Simple Agreement for Future Tokens (SAFT) with their Token Debt Payable by Assets (DPA) that attempts to put safeguards to minimize lender loses should a project fail.
And in terms of reach, Binance is the only major exchange to creep into Europe pairing up with Berlin-based Neufund that has been working with regulators structuring what they have dubbed as Equity Token Offerings (Diar, 14 May). Both outfits are also rubbing shoulders with the Malta Stock Exchange (MSX), but how this partnership will eventually play out is yet to be established.
Different Strokes
On the surface, seemingly, cryptocurrency exchanges are now shadowing one another (Diar, 18 June). But Coinbase might be veering towards institutional investors instead.
Earlier this year Coinbase purchased Keystone Capital (Coinbase Capital Markets) in their effort to offer security tokens, as well as Venovate Marketplace (Coinbase Securities), a platform f0r issuers raising capital for alternative assets.
Venovate is primarily an accredited investor platform for private placements (Reg D), as opposed to SeedInvest and Republic that are geared towards the retail investor (Reg A+). Of course, that does not exclude the possibility of opening up to retail investors either.
What does remain undetermined is how decentralized equity tokens can and will really be considering compliance, regulation and consumer protection laws.