👀 Guess What BlackRock Just Said

In this month's edition of The ReCap we'll be covering:

• Industry Updates: News around the world

• Real Estate News: You're in for a (T)REIT

• Wall Street Adoption: Institutional Asset Tokenization Report - Coming 12/12/22

• Vendor of the Month: AmbiSafe

• Advisor of the Month: Nick Steffen

• Client Spotlight: Iron Horse Capital Group

• Marketing STOs 101: Five Strategies for Effective Security Token Marketing

• Announcements: STA December Events

But first...

WHAT A MONTH!

I am in high spirits, token family. There are few things I can think of that are realistically possible and more meaningful than the slew of announcements we just saw in the tokenization industry this November. Goldman Sachs, Apollo, EIB, and others have ALL made announcements about tokenization plays. And even after all that, we get hit by the motherload! BlackRock - ahem, the largest asset manager in the world! - must be getting into tokenization because their CEO, Larry Fink, said exactly

I mean do I need to say any more? After all my time in this industry, I am predicting that, finally, 2023 will be the year of the security token, where the industry will never be the same again after. Are you ready?

Happy Tokenizing!

Herwig Konings

Founder and CEO, Security Token Advisors

[email protected]

By Anayansy Hernandez

The industry is changing fast and continues to grow as bigger players step into the security token space.

One company that is growing their place in tokenization is Goldman Sachs. They have launched their digital asset tokenization platform, GS DAP, with the issuance of a €100 million digital bond for the European Investment Bank (EIB) on the private GS blockchain.

The 2-year syndicated bond issuance was settled instantly in a delivery versus payment transaction that used experimental central bank digital currency (CBDC) tokens issued by the Banque de France.

Back in November, Archax also announced that they raised $28.5 million to expand their FCA- regulated digital asset exchange, brokerage and custodian. The money was raised through a Series A funding.

Raising this amount of money during the turbulent crypto and traditional financial market conditions is a good indication of faith in Archax and their strategy for the digital space, but also for the tokenization space as a whole.

The industry is also seeing other countries draft legislation for the digital asset space. El Salvador is drafting a digital securities bill that could pave the way for bitcoin bonds. The bill seeks to establish a National Digital Assets Commission that would oversee the regulation of digital asset issuers, service providers and other participants involved in the "public offering process" of digital securities.

The new rules are asking for the creation of a Bitcoin Fund Management Agency that will be responsible for administering, safeguarding and investing funds from public offerings carried out by the government and its institutions as well as any returns from these public offerings.

For more industry updates follow @anathemarketer on twitter.

By Alec Beckman

Read DigiShares Real Estate Report Here

Digishares is a real estate focused token issuance platform and transfer agent in the digital asset ecosystem. Read their real estate tokenization market report by following the link above.

Wander Raises $100 Million From Credit Suisse, Jumpstarting New Captive REIT Model For Vacation Rentals

The 18-month old short-term rental company Wander will announce today the raise of a $100 million debt facility from Credit Suisse to rapidly accelerate the purchase of more homes for their portfolio, with the aim of having a Wander property within a three-hour drive for 80% of the U.S. population. This announcement comes on the heels of their new investment arm in the form of a captive REIT. Called Atlas, the real estate investment trust received millions of dollars in investment interest within the first 48 hours of its announcement a month ago.

Properties as part of the Wander short-term rental portfolio are transferred to Atlas once they are ready for paying guests. Built into the model is the agreement that Wander has the right to operate and maintain the properties even if they are under the Atlas umbrella, with profits being distributed to investors monthly or after there are profits from the sale of a property.

By Peter Gaffney

*Below are excerpts from the Security Token Advisors upcoming Institutional Asset Tokenization publication, which will be available for all to read on Monday, December 12th, 2022. Connect with STA’s Head of Research Peter Gaffney on LinkedIn to stay updated on institutional developments and breakthroughs.*

WisdomTree Asset Management

One of the original ETF issuers, WisdomTree Asset Management, began implementing blockchain strategies in September 2022. The $75 billion asset manager announced it would be using the Stellar and Ethereum blockchains to digitize and record fund share ownership records - a play very similar to the aforementioned FranklIn Templeton development.

This initiative soon developed into WisdomTree’s November 2022 SEC and FINRA approval to operate a Broker-Dealer (BD) for blockchain-enabled funds through the newly-formed WisdomTree Prime, including the firm’s own inaugural fund, the WisdomTree Short-Term Treasury Digital Fund (WTSY). WTSY is structured as an open-ended fund under the 1940 Act much like a traditional mutual fund. Shares and records will be maintained by the transfer agent Securrency Transfers, who will also keep a secondary record base on the Stellar and Ethereum blockchains, as the SEC currently requires both analog and blockchain-based record keeping for all US-based tokenized products. The reason for this is that the blockchain is not yet seen as a “source of truth,” although this is a narrative that many in the industry believe will phase out as the tokenized security lifecycle becomes more proven and successful.

The main goal of using both the Stellar and Ethereum blockchains within this fund and future product rollouts is actually stated in the SEC filing. “By way of example, while the shares will initially be recorded on the Stellar blockchain, to the extent that an investor desires to transfer such shares to a personal Ethereum-based wallet (which, by its nature, is unable to accommodate Stellar-based assets), such transfer can be accomplished via the Bridge.”

The idea of self-custody when it comes to tokenized securities, security tokens, or digital asset securities (all similar monikers for a blockchain-based share) is powerful yet not fully clear at the moment. Certain security token issuance platforms and developers allow self-custody in which investors can hold security tokens in their personal digital asset wallets, while other providers require tokens to be held either on-platform or with a regulated and/or qualified custodian such as Anchorage Digital or Prime Trust. Understanding the nuances across these various providers and leveraging that for our clients’ business requirements and goals is one of the pinnacles of Security Token Advisors; the fact of the matter is that not all tokenized securities are created equal, and it’s imperative to understand just how ‘blockchain-native’ one’s product will be. In WisdomTree’s case, making self-custody effective will pin them in the quadrant that suggests greater blockchain-nativity than most existing tokenized products in the market.

WisdomTree’s Head of Digital Assets, Will Peck, wrote “When our CEO & Founder, Jono Steinberg, founded WisdomTree, he noted that, unlike traditional mutual funds, all an investor needed was a brokerage account to access ETFs. Today, all an investor needs is a smart phone to access digital assets.” The product is currently in beta mode with no management fee and can be accessible through the WisdomTree Prime digital wallet application, although there is a waitlist with certain investor criteria.

The main takeaways from these developments are that WisdomTree will not only be issuing its own blockchain-based funds and investment products, but will likely also be acting as a Broker-Dealer for third-party deals. This will enable them with additional lines of revenue and business growth as they’ll be able to support partners, clients, and investors within their own networks, and thus will have the capabilities to bring some truly remarkable names into the tokenization space.

Apollo Global

Additionally, Apollo, who ended 2021 with almost $500 billion in assets under management, announced its intention to issue a tokenized fund with Figure in November 2022 after working with Figure Lending (a subsidiary of Figure Technologies) in March 2022 to originate and transact digital mortgages.

These digital mortgages are known as “eNotes” and get automatically onboarded and registered to the firm’s Figure’s proprietary Digital Asset Registration Technologies (DART), which is a combined lien and registry system designed to streamline the loan lifecycle management with all necessary parties and to reduce settlement time from weeks down to a more real-time process. DART is essentially developed to improve on the industry-standard Mortgage Electronic Registration System (MERS). Rather than working with analog features in MERS, DART-registered assets and processes are always reflected as current in the Provenance-based ledger in order to provide much greater precision to all involved parties including originators, lenders, buyers, and other third-parties since the process “has traditionally required duplicative registration of a loan in multiple "MERS" databases and slow and risky trilateral settlement arrangements with originators, warehouse banks, and investors.”

By Peter Gaffney

The STA team would like to recognize AmbiSafe as our vendor of the month AmbiSafe is a pre-IPO shared marketplace and platform that enables international and accredited investments into a bundle of private firms through its Unicorn Equities Fund, as well as individual private companies like SpaceX, Robinhood, Kraken, and Celo. AmbiSafe can handle both the primary development and issuance side while also having a secondary marketplace for investors to actively trade with.

The firm has been responsible for over $300 million of capital raised across 57 private companies ranging from Series A through later-stage rounds. We are excited to follow along with AmbiSafe’s progress in tokenizing well-known private company shares, and believe this is one of the most interesting investable product classes that the tokenization industry can begin working with.

By Jessica Burns

Congrats to Nick Steffen for being our advisor of the month!

Nick recently joined the STA team after working with STM over the past few years as Head of Media Production & is the original producer behind the Security Token Show!!

Originally from Washington DC, Nick started his post college journey in Real Estate. He was helping to close transactions from leasing apartments to property sales and property management, later moving into commercial real estate appraisal and taking various courses in real estate valuation to become an MAI, training under several top-level appraisers in the industry.

It wasn’t soon before Nick moved back to Miami and was thrown right into the ever-growing MiamiTech Ecosystem being one of the first to join STG with Kyle and Herwig,

Nick has helped facilitate the growth of STG with Kyle and Herwig in addition to being one of the first to join the company!

Nick went right to work for the STA team, providing customized solutions to clients seeking to tokenize their assets and servicing clients needs through diligence, market research, financial modeling and consulting throughout the blockchain industry and more.

When Nick is not working hard, you can catch him DJ-ing at the hottest spots in Miami or on spotify or writing on medium.

Congrats Nick!!

By Jason Barraza

This month we’re excited to feature Iron Horse Capital Group! IHCG focuses on aggregating portfolios of single-family residential properties. With over 80+ years of single-family residential experience across their team and over a decade of company operations, the firm is well-positioned to capitalize on current residential real estate opportunities. It exists to move people from a vague financial future to one that is defined by clarity, control, and freedom.

Pete Kavanagh is leading the charge at IHCG. He not only attended one of the most prestigious universities in the US, Johns Hopkins, but was also a special operations officer in the Army! This speaks to his work ethic, perseverance, attention to detail, and of course leadership - all things to consider when investing in not only a company but a founder as well.

So what did STA do for Iron Horse?

• Ecosystem overview

  • Holistic understanding of all options throughout the tokenization process including service providers (issuance platform, transfer agent, etc)

• Platform selection and negotiation

  • Based on business requirements for optimal compatibility

• Marketing Strategy

• Website and Pitch deck audits + creation

STA is dedicated to ensure our clients are set up for success and that is a custom, holistic approach for each. From the tokenization process to go-to-market strategy, Iron Horse Capital Group will launch a great offering and we’re proud of them for embarking on this extensive yet rewarding journey.

We just did a webinar with them last night! If you missed it, don’t worry you can watch the replay below!

By Anayansy Hernandez

Five Strategies for Effective Security Token Marketing

As tokenizing assets gains momentum, the need to market security token offerings becomes apparent. In this new industry, it is difficult to find successful marketing for new STOs. This might not necessarily be a bad thing because it allows room for creativity and innovation. At STA we have helped several clients launch their offerings and have learned some strategies along the way.

Here are Five Strategies for Effective Security Token Marketing.

1. Have a Clear Strategy: Before launching a security token, it is important to have a clear strategy in place that outlines the goals, target audience, and desired outcomes.

   1. The more detailed the strategy is, the better the results. This will require deep research about your ideal investor. While strategizing ask yourself the difficult questions- what desired outcome do you want this person to make and how do you get them to take action?

2. Leverage Influencers: Influencers have a large following and can be a great asset in helping to spread the word about your offering.

   1. In the security token world, influencers are not necessarily social media stars. Instead, they are the companies that are making the biggest noise in the industry. Have a targeted list of companies to reach out to for collaborations. The goal is to get on a podcast or webinar to give your offering more exposure.

3. Build an Online Presence: Having an online presence is key to generating interest and awareness. This includes building a website, creating social media profiles, and engaging with potential investors.

   1. This is where branding and messaging come into play. The research you did at the beginning will be needed to have the correct messaging for your audience. Use only the social media sites where you believe your investors will be, remember sometimes less is more.

4.  Utilize Content Marketing: Content marketing is an effective way to educate potential investors about a security token and its benefits.

   1. This can include creating blog posts, white papers, webinars, and other forms of content. The idea is to create enough content for about 2 months in advance.

5. Engage with the Community: Building relationships with the community is essential for generating interest and awareness. This includes participating in online forums, attending industry events, and engaging with potential investors.

   1. The best marketing is the one where people don’t know they are being sold to. Your brand will stand out when it feels like a friend rather than a company. They will relate to you more if you solve a problem for your target audience.

Above all, the best strategy is to plan accordingly in advance prior to launching your offering. Connect with me on LinkedIn and Twitter for more tips.

~Anayansy Hernandez

Check out some guest articles from incredible people in the industry! This month we have Corey Goodlander from Chainraise and one of our own clients, Pete Kavanagh from Iron Horse Capital Group. Enjoy!

Corey Goodlander

Pete Kavanagh

Real Estate Tokenization Course: Sponsored by Oasis Pro Markets

Our self paced course guides you through the tokenization of real estate, from the basics of blockchain to regulation and liquidity. This course also comes with case studies and webinars with industry leaders!

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