OpenFinance Network (OFN), a trading exchange for tokenized securities, is launching an alternative trading system (ATS), which is a clearing and settlement platform based on the blockchain that lets companies raise capital with security tokens. It also provides a secondary market liquidity for ICO tokens that are offered and sold as securities.
The venture, which will capitalize OpenFinance’s regulatory approval, aims to create a way for companies to tokenize equity and issue it on a blockchain without running afoul of regulatory obligations.
Many US companies are seeking to tap the rapidly emerging asset class of digital tokens which has raised more than $14 billion so far this year, per Coindesk’s ICO tracker. Also making this a huge growth industry, cryptocurrencies overall currently have a current market cap of $222 billion, according to coinmarketcap.com.
Furthermore, the move is being seen as a response to US regulators classifying certain digital tokens as securities, and therefore coming under the SEC’s supervision. Wall Street’s top watchdog says that any entity that wants to become an ATS needs to register with the SEC as a broker-dealer and become a member of a self-regulating organization, such as the FINRA.
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Earlier in June, Coinbase announced that it is moving forward with a plan to acquire licensure that would allow it to begin offering blockchain-based securities and participate in the ICO market. The company has also acquired the broker-dealer Keystone Capital Corp, which is based in California.
Investment from Huobi
An alternative trading system is a trading venue that is not regulated as an exchange but operates by matching the buy and sell orders of its subscribers.
OpenFinance already offers a platform that manages the entire lifecycle of blockchain-based digital assets, including origination, issuance, exchange, settlement, and redemption. The site claims it will enable all operations in a regulatory compliant manner. Its client roster includes banks, brokerage houses, custodians, and transfer agents serving the alternative markets.
The US-compliant startup has recently announced partnerships with a list of prominent players in the blockchain industry as it seeks to capture a portion of a huge market class that is waiting to be tokenized. Earlier this month, it received a significant investment from Huobi, one of the world’s largest cryptocurrency exchanges.