Equity crowdfunding platform StartEngine has just announced a new token standard on Ethereum for creating digital stock certificates. SEC-registered entities will be able to enact the new standard, thus opening up a much-needed option for compliant tokenized securities.
After roaring success at the first StartEngine Summit, the crowdfunding platform is now rolling out a new release for the burgeoning tokenized security space: the ERC1450 standard. The CEO of StartEngine, Howard Marks, broke the news earlier today.
Moving existing assets onto blockchain-based systems remains one of the most pressing questions in the space today. Real estate and other financial securities alone account for trillions of dollars worth of value. However, all securities are heavily regulated by the SEC, thus making it so that each transaction of securities requires a registered broker-dealer as an intermediary. So this begs the question: how can blockchain best reconcile regulation with transparent decentralization?
Introducing the ERC-1450 Standard
ERC-1450 is one of the first token standards for securities on Ethereum: a standard for creating digital stock certificates.
As per the announcement, any ERC-1450 token will require a registered transfer agent to create and process the tokenized securities. Transfers of ownership can be done directly from buyer to seller or through an SEC-registered broker-dealer. Of course, all tokenized securities under ERC-1450 will have the added benefit of being completely transparent, all easily trackable on Ethereum’s blockchain. That’s what makes the ERC-1450, and all tokenized securities, a significant game-changer for the fintech world.
StartEngine will be using the ERC-1450 standard to list tokenized stocks and equity on their crowdfunding platform. The platform will be using the standard to issue tens of thousands of tokenized securities. Currently, ERC-1450 tokens have been issued to all 3,500 StartEngine shareholders and the 165 eligible companies that use StartEngine Secure will expectedly be listed using the ERC-1450 standard.
Although other contributors to Ethereum have created their own standards for tokenized securities, StartEngine is the first firm to release their own standard that is currently in use.
StartEngine is an equity crowdfunding platform formed in 2011 that connects investors with startups. They were responsible for pressuring the SEC successfully to allow ordinary investors to purchase shares in startups, passed under the JOBS Act in 2012. Since then, they have taken a leading role in the growing tokenized security space.
What do you think of the new ERC-1450 standard? Does Ethereum need a new token standard for each different kind of tokenized securities? Let us know in the comments below.
Image courtesy of StartEngine.