Securitize, a digital securities issuing company located in San Francisco has gotten the U.S. Securities and Exchange Administration (SEC) approval to become the first “blockchain-focused agent.” This move will allow Securitize to become an authorized blockchain securities record keeper; which involves the storage of digital securities registered with the SEC. According to the company, this will help boost the adoption of digital securities and could make Securitize become one of the most prominent digital securities providers in the United States.
Why do we need a blockchain securities record keeper?
Having an official blockchain securities record keeper sounds redundant because the blockchain is already a database created to track the transfer of value within its network. However, Securitize says that its function as a record keeper for digital securities will bring other new merits to the table.
Speaking on this matter, Carlos Domingo, co-founder, and CEO of Securitize stated that:
“We can increase the amount of securities issued on the blockchain and give comfort to people that this is a regulated space… The SEC has also started approving other types of exempted securities like Reg A+, and down the road, those people will need transfer agents.”
Traditionally, record transfer fees for SEC-registered securities usually cost around $150/transfer; however, Securitize is offering an incentive of free record transfers on their platform. The company will only charge for management of securities and implementation of corporate action, including share buybacks, redemptions, and dividend interests and payments.
Securitize is Making Head Way
After receiving financial backing from Coinbase during a $12.7 Million Funding Round, Securitize proceeded to join the IBM Blockchain Accelerator program in January of 2019, with the intention of building a blockchain-based debt insurance platform. In April, the company launched a token compliance program which sought to simplify the process of designing and issuing tokens.
More recently, Securitize announced its eleventh issued digital security which runs under its protocol. This brings the total value of securities under the company to $200 million. Five of the company’s securities trade on a regulated, SEC-registered alternative trading system (ATS). Securitize now advertises itself as an authentic multifaceted token services business. This is due in no small part to these developments. The company seeks to continue building partnerships for this endeavor.
The SEC Relationship with Blockchain Technology
The SEC hasn’t always been a fan of cryptocurrencies or other digital assets. This is due in part to a large number of scams perpetrated by dishonest developers. Numerous scams took place during the “initial coin offering (ICO) by startup companies.” These cryptocurrency developers took advantage of the absence of proper regulation. In turn they were actively luring investors into their business with false promises only to abscond with millions of dollars from their victims. These illicit activities prompted the SEC to enforce stringent consequences for fraudulent startups in the crypto space. They also launched a campaign against these scammers, issuing civil penalties and even shutting down some of these blockchain enterprises. Other companies like KiK that tinkered with ‘illegal securities’ also faced the ire of the SEC.
SEC is Becoming Crypto-Friendly
While the SEC has been harsh on crypto scams, the commission appears to have begun to soften its stance. They appear to be more open towards innovation in blockchain technology. Over the past few months, the SEC is straightening out the “rules of engagement” for blockchain companies. In April, the commission released a document titled Framework for ‘Investment Contract’ Analysis of Digital Assets. It was initially thought that this document contained the SEC blockchain guidelines. However, upon analysis, experts agreed that it only discussed the basics. It failed to provide proper clarity for the different nuances when dealing with blockchain technology.
A few months later, the SEC unveiled its Blockchain Risk Monitoring Amendment. The Risk Monitoring Amendment is a tool that will help the SEC improve its ability to monitor blockchain-related risks effectively. According to industry experts, it may be the first step in laying down proper blockchain guidelines. Furthermore, it will bring clarity and help promote innovation within the industry.