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🍎 Tokenization is Taking a New Course
September's updates from the STA team
Security Token Advisors
August 02, 2022
In this month's edition of The ReCap we'll be covering:
Industry News: International Moves
Real Estate News: STA's New Real Estate Tokenization Course... Coming soon!
Wall Street Adoption: Tokenization for Institutions
Vendor of the Month: Ovenue
Advisor Spotlight: Anayansy Hernandez
Client Spotlight: Top Floor
Marketing STOs 101: Investor Relations
Announcements: Ask a Token Advisor tomorrow at 12pm EST
But first...
Good morning visionaries,
Hopefully everyone enjoyed their Labor day weekend (in the US) or had a great weekend in general after we have kicked off the final month of Q3. I have to start out this month by appreciating the fact that the team at Security Token Market (under our guidance) alongside Securitize have kicked off a Reg CF campaign successfully - the first Web3 investment of its kind! Literally, you can buy securities in a private offering and instantly get tokenized securities in your wallet, recorded on the Avalanche blockchain and completely open for anyone in the world to invest. Now, that’s cool if I say so myself (full disclosure I think it’s not just cool because STM is our sister company!). I always love to see companies eat their own dog food so I am delighted to see this come to life.
And furthermore, the industry continues to plan new listings including announcements from INX and tZERO while we keenly wait for new players like Oasis Pro Markets to start opening their trading doors. Security Token Advisors is also excited to announce a new virtual classroom on real estate tokenization that we hope will further expand education for industry professionals to leverage this technology and usher in security tokens using the best industry practices - a win-win for the whole sector!
As always, if you have any news, collaborations, or tokenization leads, we’re here to welcome you with open arms.
And with that, happy tokenizing!
Best,
Founder and CEO, Security Token Advisors
August 3rd 2022
In the UK, legal experts have begun a public consultation to provide regulatory clarity regarding digital securities. The consultation is being conducted by the government-backed UK Jurisdiction Taskforce. The goal is to provide clarity to the market as to the types of digital security model which English law will support. Currently, no regulation has been introduced in the UK but there is hope in the market that British law may be less supportive of digital securities than fellow surrounding countries in Europe. The consultation aims to address these concerns and is seeking input by the various stakeholders in the industry. Sir Geoffrey Vos, Chancellor of the High Court and chair of the UKJT comments: “We recognise many experts and interested members of the public in the legal, digital and financial sectors have views on this. This consultation allows them to have their say on this important subject.” The Consultation began in late July and ends on September 23rd.
August 15th 2022
Galaxy Digital has announced that it is abandoning its plan to acquire BitGo for $1.2B. The deal was announced in May 2021 and was expected to close by the end of that year. However, the wheels fell off when Galaxy claimed that BitGo did not send audited financial statements for 2021 by the July 31, 2022 deadline and the deal fell through. Galaxy still intends to list its shares on Nasdaq despite a 550 Million dollar loss last quarter. BitGo is seeking 100 million in damages. This will be an interesting story to follow as it continues to develop.
Aug 16, 2022
SK Securities, South Korea’s second-largest business group is partnering with a Daegu Bank to launch a digital asset custody business. They’ve gone ahead and bought up a 9.7% stake in Infinite Block, a blockchain technology-powered fintech outfit that develops digital finance infrastructure for traditional and emerging markets. SK Securities intention is to expand into the realm of security token offering and NFT issuances. This is the first major crypto-related M&A from a South Korean securities firm. DGB Daegu Bank’s President Lim Seong-hoon was quoted as stating:
“This investment is meaningful in that it is the first time a domestic regional bank has moved into the digital asset market. It is a market with great potential. We will work with excellent companies and provide high-quality services to our customers."
By Alec Beckman
STA Launches Real Estate Tokenization Education Course:
After working with dozens of real estate companies and platforms, STA is releasing a 10 hour, 4 part course to help bridge the knowledge gap for people who are interested in learning about tokenization and how it is impacting real estate.
Who is this course for?
This course is designed for 3 people:
Real Estate professionals interested in understanding the digitization of real estate and how it impacts them positively.
Service providers in the real estate space looking to separate themselves by being able to knowledgeably talk about Blockchain and how it impacts real estate.
People looking to teach others about tokenization in real estate.
What will you take away from this course?
The course will provide a baseline understanding of real estate tokenization on a do it at your speed module platform with videos, written sections, and many interactive components.
STA will also do live sessions every month with the leaders in the real estate tokenization space.
The course will be broken down into 4 sections:
Section 1: Introduction
Intro to Blockchain
Real Estate Applications of Blockchain
Define Real Estate Tokenization
Benefits of Tokenization
Players in the Tokenization Space
Market Overview
Section 2: Traditional vs. Tokenized
How Tokenization Affects Real Estate
Raising Capital (Traditional vs Tokenized)
Compliance (Traditional vs Tokenized)
Payments and Distribution of Rental Income
Reporting (Traditional vs Tokenized)
Section 3: Liquidity
How is Tokenization Done?
Tokenization Process & Timeline
Liquidity Options
Programmability
Smart Contract Capabilities
Transfer and Trade Restrictions
Ongoing Valuations
Blockchains to Tokenize On
Section 4: Use Cases + Case Studies
Different Cases for Real Estate
Case Studies
Additional Resources
When will this course begin?
This course will begin on September 22, 2022.
How do I take this course?
This course will be available online via an online web portal.
How much does the course cost?
The course is available for $1,000 per person. To sign up, please use this link.
We are offering group rates for groups of 3 or more and have individualized classes for companies. Please reach out to alec@securitytokenadvisors for more information!
August, which is typically a slower month in the financial markets, had some pretty notable names and headlines on the institutional side. State Street, who has been teasing tokenization for a year or two now and making moves on the digital assets custody side, announced that it would be tokenizing funds and products in 2023. Specifically focusing on its $3.9 trillion asset management arm, the firm would seek to provide greater precision and access to its services, namely to retail investors and accounts. This is typically a tough feat to manage, since retail accounts just don’t provide enough capital to make it worthwhile for State Street and comparable organizations to onboard and manage. Since tokenization, as we know, automates and streamlines investor onboarding, management, and distributions, the tides are officially shifting and institutions are embracing the “retail capital.”
Additionally, August saw the names abrdn ($500+ billion AUM), Schroders ($700 billion AUM), and Hamilton Lane ($100 billion AUM, $800 billion under advisory) surface for similar reasons. First, abrdn invested in the UK-based security token exchange Archax prior to announcing its intent to tokenize funds and products later this year and early next (likely on the Archax platform). Schroders followed suit and teased investment into certain infrastructure providers as well, which would put them in a ring with existing security token infrastructure investors including Morgan Stanley, Goldman Sachs, State Street, abrdn, Societe Generale, WisdomTree, US Bank, and others. Finally, Hamilton Lane is looking to build on their proof-of-concept, in which they tokenzied a portion of their $2.2 billion Global Private Assets Fund on ADDX, with additional products and/or a greater share of the GPA fund. The main motivation for tokenization here was decreasing minimum buy-in amounts from $125,000 to just $10,000 per investor. Again, right up the retail-first narrative.
Interestingly, it came out that Tiger Global looked to JP Morgan to help fill $1.9 billion of its $11 billion PIP 15 fund. Essentially, JPM packed sourced the capital from its high-net-worth individuals and blank check-esque initiative in the firm’s private banking arm. This is merely one step removed from “going retail,” which means taking retail client capital - a blue moon in the VC industry, especially from the behemoth in the space.
However, now that we are seeing both 1) demand for smaller pools of capital from venture capitalists and private investment firms themselves AND 2) the capability to syndicate and manage pools of capital from a fragmented number of smaller investors via tokenization, it’s quite plausible that institutions begin offering products and services to retail investors on the blockchain. An effective market needs both sides of the equation: and we are now seeing that come to fruition.
Lastly, we published the fifth episode in our Tokenization for Institutions series with digital asset manager Arca - this episode featuring Rayne Steinberg, Arca’s CEO and original co-founder of $75 billion WisdomTree Asset Management. The episode breaks down institutional adoption and challenges across the product and operational levels - both of which are equally applicable and important to the industry - with an emphasis on blockchain-transferred funds following in the footsteps of ETFs in traditional markets. Asset managers looking to enter the tokenization space are encouraged to email [email protected] for further insight.
OvenueTM, a previous client of STA, recently unveiled its platform that bridges the gap between real-world assets and nontraditional financing through DeFi. Ovenue uses a proprietary AI-based valuation engine to onboard real-world assets(RWA), value them, tokenize assets via NFTs, and enable the asset owner to monetize, finance, or lease the assets through Ovenue’s marketplace. The platform offers an end-to-end solution to properly tokenize and transact real-world assets via NFT - which is a facet where most existing NFT platforms fail.
The solution here is perhaps one of the more Web 3.0-focused tokenization routes that asset owners and firms can take, as it allows for both tangible and intangible assets to become actionable immediately. For example, a real estate firm who wishes to monetize a condo unit without selling it or renting it out manually can tokenize the unit on Ovenue’s platform, list the rights to the unit, and transfer them (fully legally) all via NFT. This reduces the manual nature of the process and increases exposure and access exponentially. The same process can be applied to intellectual property, machinery, automobiles, private funds, investment interests, and more.
The STA team congratulates Ovenue on surpassing the $400 million of Tokenized Assets Valued (TAV) mark, and looks forward to the impending growth and overlap to come.
We are so excited to announce our Advisor of the month: Anayansy!
One of the newest advisors at STA, Ana joined the team to help Jessica with our marketing department but quickly jumped into a Jr Advisor role.
With a background in experience in both Education and Marketing/ Public Relations Ana was a great addition to our team. A former teacher, she has revolutionized the way we approach education clients and has spent much of her time at STA on creating a real estate tokenization educational course along side Alec Beckman.
Ana creates and implements a-lot of the content you see at STA including of all the marketing platforms. She has made great efforts in helping us create a larger online presence and spread the security token gospel.
She has already started writing about the Security Token Industry, focusing on marketing compliantly and Reg CF & has played a huge part in marketing our own RegCF for our sister company: STM
Check out the Security Token Advisors and Anayansy's LinkedIn page and other socials to stay up to date with the latest in #SecurityToken Industry.
When she’s not at the office, traveling with the team or at a conference - Ana can be found doing yoga, inspiring others to be their best or at a local kava bar or on the beach!
Welcome to the Team, Ana!
By John Pittman
Ladies and gentlemen..may we present Top Floor…one of the newest projects to come out of the STA pipeline. Before we dive into the exact services we’ve provided for Top Floor let’s discuss the backstory.
Security Token Advisors has always looked to educate those within and outside the industry regarding the benefits of tokenization. Ourselves along with other players in the security token space have noticed that real estate has positioned itself as the perfect industry to serve as the proof of concept for tokenization. With that in mind STA began reaching out to real estate developers across the industry.
After many conversations with a few of the most popular developers STA realized that the industry needed to have an education-focused community. A community that served developers and investors of all types. Thus came the idea behind Top Floor.
Top Floor is an educational ecosystem built for entrepreneurs looking to scale their business through strategies provided by the mentors who participate with the platform. While there is an emphasis on education there are also tools to help provide members with the skills to generate more capital which they then could use for investment opportunities. Some of those tools include:
Digital courses that help teach members income-generating strategies
Virtual live events to educate and mentor members wherever they are
In-person events to connect members offline
Another innovative feature to be included is that Top Floor will be providing members with an NFT 90 days after they’ve purchased the membership. This NFT will represent the members lifetime access which they then will have the option to trade or sell to other parties.
The entire team at Security Token Advisors has played a huge role in developing and powering these tools that Top Floor utilizes. STA will also be playing the role of mentor as it will be offering its Real Estate Tokenization Virtual Classroom for members with premium access (“Residents”). As a bonus there will also be an exclusive mentorship group where members will have 24/7 access to the consultants at STA.
Now it’s obvious that Top Floor is leveraging the traditional advisory services from STA such as the classroom and mentorship group but there are a couple services leveraged here that I don’t want you to skip over. One of those being marketing, the NFT minting process and community services.
STA has worked with several clients who have integrated NFTs into their projects and are experienced when it comes to finalizing strategy and tokenomics for those projects. Most of those types of projects typically work in tandem with an online community. STA recognized community services as a necessity for clients and with that offer the option for clients looking to develop an online community and framework which plays a large role towards project success.
Top Floor is officially live as of Aug 5th and already has hundreds of members in their community and thousands across their social media platforms. Go check them out on their discord
Project details are within the online community. If you interested in joining Top Floor or have any questions please reach out to their support team - [email protected]
Why your STO needs Investor Reations
Investor relations ensures that tokens are being fairly traded through the dissemination of key information that allows investors to determine whether a company is a good investment for their needs.
Investor Relations (IR) combines finance, communication, and marketing to effectively control the flow of information between a company, its investors, and its tokenholders.
Investors play a major and vital role in the success and growth of a company. Because of that fact, it’s of the utmost importance for companies to maintain strong, transparent relationships with investors.
The top executives of a company often have a large number of tasks they have to juggle on a daily basis. To help handle some of these responsibilities, the IR department will often be the place where word from Wall Street comes in, and will also be the portal through which the company communicates back.
Think of your IR person as the face of a company. Of course the CEO is the face of the company but when you need more information on the inner workings of an offering- This is where the investor relations department of a company comes into play.
What are the Goals of Investor Relations?
The main goals of investor relations professionals are:
Representing the company to investors and representing investors to the company
Providing financial information to investors in a timely and accurate way
Providing non-financial data to support company valuations
Observing the rules of securities commissions and ensuring all communications and investor presentations are compliant and align with the company message
Presenting investor feedback and any issues to company management and the board
Help manage and track quarterly investor in person meetings
The main goal for your Investor Relations person is to bridge the company vision, mission, strategy and markets with analysts and investors in a way that makes sense.
They also help to reinforce messages and manage all external communication channels (conference calls, investor presentations, investor meetings, press releases, filings).
The newest IR practices have 3 purposes beyond’s its traditional functions;
Proactive ‘person of contact’ familiar with the company’s story
Fundamental understanding of token offerings & the investment process
Internal purveyor of market intelligence to executives on sentiment and valuation drivers
IR also acts as a communication portal for investors and the company but they also assist with many types of investor communications. The first role of your IR person will be to create a captivating and exciting story about your upcoming STO that they can clearly communicate with investors compliantly.
Your IR person can also act as a translator for investors, ensuring that they understand everything about your STO including how tokenization works & breaking down some of the more ‘technical’ terms to ensure investors have a clear understanding of your STO, their investment and everything in between.
So what are the benefits of having an investor relations person? There are many but to name a few: they help maintain a loyal tokenholder base, while enhancing long-term tokenholder value, ensure receptive capital markets for future financing at favorable terms, lower the cost of capital and of course build long term credibility with the investment community.
If you'd like to talk about Investor Relations for your upcoming STO, please send us an email;
Jessica Burns, Head of Investor Relations: [email protected].
Since there’s been little official guidance from the SEC regarding a lot of its thinking with regard to tokens, crypto attorneys and advisors (including those at STA) are doing their best to scour through any text provided by the SEC when they come after any crypto companies for selling unregistered securities. This recent article from CoinDesk dives into this phenomenon deeper, and shows how the SEC’s allegations against Coinbase last month that they were hosting 9 coins that they deemed securities are shedding light on what exactly the SEC’s modern definition of a security is, and what makes these coins different from the rest of the tokens hosted on Coinbase. The thinking is that if these differences can be found, then it could provide clearer direction for any would-be crypto projects to avoid SEC-scrutiny. According to the article “there are some factors common among the examples, according to crypto’s legal advisers. The tokens’ developers or founders typically retained significant stakes, they designed the assets to appreciate over time, and they took actions in the hopes their coins would grab gains on secondary exchanges”. These factors should be taken into account when thinking about the compliance of your crypto project. Still, the bottom line is that the SEC has long owed this industry some clarity, and hopefully with some pushes from the industry, it will come sooner than later. Until then, we’ll be reading the tea leaves to try and understand their thinking to keep you and your projects as compliant as possible.
ANNOUNCEMENTS:
Ask a Token Advisor
Have questions around tokenization, securities laws, blockchain, STA, or anything Web 3? Great, we have answers!
Join our Head of Consulting Adrian Alvarez and Head of Research Peter Gaffney tomorrow at 12pm EST and ask away on Twitter Spaces. Set your reminder 👇
