Security tokens platform, OpenFinance Network (OFN), has launched a regulated trading venue platform. The alternative trading system (ATS) creates an avenue for companies seeking to tokenize their equity without running the risk of breaking regulatory obligations.
The CEO of OpenFinance Network, Juan Hernandez, confirmed in an interview with Coindesk that the launch of the platform’s alternative trading system had commenced. This was supported by an official announcement on the company’s blog. OpenFinance Network is an alternative trading system and an exchange for tokenized securities. These ATS platforms are trading venues that are not regulated as an exchange but operate by matching the buy and sell orders of their subscribers.
Accredited US investors can now trade digital assets on OpenFinance’s exchange platform. An option exists for retail investors who cannot receive accreditation whereby they may be able to trade certain digital securities subject to a 12-month holding period.
SPiCE VC (SPX) will be the first tradeable token on the platform with Science, Protos, MintHealth, Corl, Bloxroute and Property Coin being added in the near future. The exchange has confirmed that other tokens eligible under a Regulation S, D, A+ or CF exemption may also be listed.
Emerging Digital Token Asset Class
Many tech companies in the US, realizing the potential of digital tokens, have begun to tap into the rapidly emerging asset class. So far this year, digital tokens have raised more than $14 billion USD as per Coindesk’s ICO tracker. Coupled with this is the growth of the overall global cryptocurrency market, which is estimated to be approximately $200 million USD according to coinmarketcap.com.
The move by US-based OpenFinance is being made in response to US regulators, who have brought certain digital tokens under the SEC’s supervision by classifying them as securities. New amendments by the SEC indicate that any entity that wishes 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 FINRA.
The OFN trading platform uses a hybrid-chain model that combines off-chain data privacy and speed with the security and transparency of the Ethereum network. Through blockchain integration, OFN is able to lower transaction costs and increase the number of accessible entry points during trading.
Huobi Strategic Partnership
Earlier in August, OpenFinance also confirmed a strategic partnership with Huobi, one of the world’s largest cryptocurrency exchanges. Both companies reached an agreement whereby they plan to expand their exposure to new digital asset markets and trading systems.
OpenFinance joins a number of other cryptocurrency exchanges seeking to launch ATS platforms. Earlier this year, Coinbase, Bittrex, Overstock and Templum also announced their respective launches of similar systems as a way to legally trade security tokens on a regulated platform within the U.S.
What do you think of OpenFinance’s new alternative trading system for securities? Do you believe it has potential and will be a success? Let us know what you think in the comments below.
Images courtesy of 123RF, OpenFinance website and Medium blog.
Meet Tim. Tim is a co-founder of The Tokenist. Originally from Kalamazoo, Michigan, Tim is a mechanical engineer by training and has been investing his whole life. He started his career with GE in engineering and operations management where he held various leadership roles before leaving to pursue an MBA (he is a proud former co-chair of the Milton Friedman Group at Chicago Booth). After business school, Tim spent several years with Baird Capital where he made private equity investments in consumer and industrial companies. He left Baird to found Protective Technologies Capital in 2018, where he continues to make private equity investments in family businesses looking for help with succession planning. Tim lives in Chicago, where he enjoys watching Michigan football and basketball and traveling with his wife Kristen. Like Sia, he also likes telling jokes. However, his wife adamantly insists that he not share his “dad jokes” publicly so he reluctantly sticks to writing about finance and technology.