Leading Digital Asset Investment firm in the New York, NovabLock Capital in partnership with Ownera and Security Token Summit has released an in-depth report that outlines the present, past and future of digital securities. The report which is titled “State of Smart Securities - 2019” highlighted the evolution of capital formation, the benefits of smart security and the challenges ahead.
Also known as Security Tokens, Smart Security relies on blockchain technology to expand investor base and reduce frictions to trade, while automating compliance procedures, such as investor eligibility, disclosures and communications, cap table management, and enforcement of investor rights. It also enables fractionalized ownership of real assets, instant settlement, 24/7 global markets, increased liquidity, and reduction in ongoing compliance and issuance costs.
According to the CEO of NovaBlock Capital, Leeor Shimron Smart Securities are the next evolution of capital markets and capital formation.
“This phenomenon will affect retail and institutional investors, enabling the creation of new modes of ownership and eliminating the barriers to participation amongst a global investor base. No asset class is immune, and this technology will force the largest of financial institutions to pay attention to the promises of the blockchain. Trillions of dollars of wealth creation are at stake as digital assets gain the monetary premia currently enjoyed by US equities, real estate, and other traditional assets.” He added.
The report also indicated that the introduction of Smart Security as an investment vehicle will create an arm race to tokenize previously illiquid asset classes.
“These developments provide an unprecedented set of choices for accredited and institutional investors to gain portfolio diversification, long-term asset appreciation, and additional sources of revenue across an asset’s lifecycle.” Some of the benefits of Smart Security as stated by the report include; “fractional ownership, 24/7 global markets, automated compliance, rapid settlement, and increased liquidity cost reduction.”
Already some issuance platform technology and service providers which have tokenized their LP interests to add secondary-market liquidity have indicated interest in this security Token.
“Polymath is developing a suite of tools for participants to launch, invest and trade in financial products on the blockchain. The Polymath platform will facilitate interactions between issuers, service providers (specifically KYC providers and legal firms), investors and developers. Harbor is an all in one platform for tokenizing private investments. Harbor provides a fully compliant solution with KYC/AML integrated into the blockchain protocol. The primary focus is on real estate with initial investment offerings including housing complexes across the US.
“Trust Token aims to build a legally enforceable protocol with blockchain-based ownership and control of real-world assets via smart contracts. The company created TrueUSD, the current largest USD backed stablecoin by market capitalization, and plans to tokenize assets including fiat currencies, commodities, and real estate.”
On the future of Smart Security, the report states that digital securities may trade at a discount to NAV. However, regulatory Compliance KYC/AML/OFAC and sanctions screening mechanisms must be automated, while Legal frameworks need to be established to reduce legal barriers to entry.
To find out more about NovaBlock Capital, Ownera and the 2019 Security Token Summit scheduled for April 8th, at The Ritz-Carlton Los Angeles. Click here