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February's updates from the STA team
Security Token Advisors
February 08, 2023
In this month's edition of The ReCap we'll be covering:
Industry Updates: Different Jurisdictions are Opening Up
Real Estate News: Tokenise Europe 2025 and Sberbank
Wall Street Adoption: Bonds, Private Equity, and Structured Finance
Vendor of the Month: IntainMARKETS
Advisor of the Month: Nick Steffen
Client Spotlight: Sauvie
Marketing STOs 101: Email Marketing
Cap Table Commentary: Check out some great articles from the team!
Announcements: Assurely and Protecting Both Issuers & Investors - 2/15/2023 6pm EST
But first...
Have you noticed our new look? We’ve got a brand new website over at securitytokenadvisors.com. And that’s because we’re following our sister company, Security Token Market, which just moved to STM.Co - go check it out!
This new change goes in line with the upgrade in institutionalism the market has reached. We’re bringing curated asset level and trading level data on tokenized securities for professional investors to use in order to be able to participate in this market. And that’s the type of investor we can expect to see now that major financial institutions, large real estate developers, and top grade fund managers are all tokenizing assets.
Bonds, loans, securitizations are also being touched by tokenization. Read below all the key news that kicked off the year making the CEO of the largest asset manager, Larry Fink, look spot on when he recently said the future of financial markets is tokenized markets.
Happy Tokenizing!
Founder and CEO, Security Token Advisors
Good morning Tokenizers! As 2023 ramps up, we've been seeing multiple jurisdictions increasingly evolve to accept tokenized securities or even tokenize an asset themselves. Check out some examples below from this past month:
South Korean Regulators are Adopting Security Tokens: STOs were previously illegal in South Korea and now the FSC is creating guidelines to accommodate them. The specific guidelines are expected to be released later this month but the general premise is that "the act of tokenizing itself is not subject to regulation but rather it applies to the underlying security represented by the token. This may include any filings, platforms used and licenses needed based on their role, reporting, and other considerations related to that asset."
Blockstation and the Jamaica Stock Exchange e-Campus Launch First Certified Digital Asset Training Course for Investors: The course is a key part of the JSE’s activities to prepare for the launch of its new Digital Asset Platform later this year. This course is dedicated toward creating a safe and compliant environment for digital assets which in turn we can expect to make the capital markets more accessible. Something I'd love to see is the United States following suit in creating a certification to redefine an "accredited investor" - a course STA would love to help create alongside the SEC and FINRA just as Blockstation has with the JSE and Jamaican FSC.
For more industry updates follow @anathemarketer on twitter and check out STM.Co
By Alec Beckman
A new initiative called Tokenise Europe 2025 is being spearheaded by the European Commission (EC) and the German Banking Association to tap into the potential of asset tokenization and distributed ledger technology (DLT) to strengthen the bloc’s competitiveness and build long-term economic resilience.
The initiative, which is being supported by more than 20 member organizations from different countries and industries including banking trade groups and paytech firms, aims to establish a solid foundation for the development of tokenization in Europe with hopes that the technology will drive change and efficiency in industries including finance, supply chains, trade finance, logistics and public services.
Tokenization refers to the process by which an issuer creates digital tokens on a DLT or blockchain, which represent any type of assets. Tokenization can be applied to regulated financial instruments such as equities and bonds, tangible assets such as real estate, precious metals, as well as works of authorship and art. The technology’s benefits are multiple and include increased liquidity, faster settlement, lower costs and bolstered risk management.
According to a report published by the news outlet Interfax, state-owned financial services company Sberbank, based in Moscow, plans to launch a decentralized finance (defi) application for real world assets like real estate. The platform is currently undergoing closed beta testing, according to Konstantin Klimenko, Sberbank’s blockchain laboratory product director.
“We have set ourselves a big goal — to make the Russian defi ecosystem number one,” Klimenko said. “Our network is currently working in closed beta testing format … But starting March 1st, we will move to the next phase and it will no longer be beta testing, but open testing,” Sberbank’s blockchain laboratory executive added.
The platform, which will be based on Ethereum, will work with the Web3 wallet Metamask. Sberbank’s team aims to make it publicly available by the end of April and hopes it will enable large-scale commercial defi operations. In June 2022, the Russian banking and financial services giant conducted the first digital asset transfer on its platform, which was approved by the Bank of Russia. In September, Sberbank announced that its platform will also allow non-fungible token (NFT) minting.
Yet again we have seen headlines and developments on the trifecta that is:
Bond Issuances
Private Equity Funds
Structured Finance
On the bond side, Europe expands and extends its geographic lead as both UBS and ABN AMRO made some waves. UBS followed its $405 million offering from November 2022 up with a $50 million issuance to high-net-worth APAC clients. This is the first time uncertificated securities were approved and compliant under both English and Swiss law. Additionally, the issuance was facilitated on the Ethereum blockchain, and created a playbook that UBS plans to unroll for third-party deals, clients, and partners.
Coming out of ABN AMRO, a prominent Dutch bank, the firm was responsible for one, if not the first, true external investor-subscribed digital bond issuance. Although small in magnitude (roughly half a million dollars), ABN AMRO issued a digital bond for an aviation client of theirs. The buyers of the digital bond were not simply another division or partner of the bank, but rather were existing equity investors in the client firm. ABN AMRO utilized the Stellar blockchain (which WisdomTree Asset Management and Franklin Templeton also make use of for their tokenized products), as well as Fireblocks and BitBond on the issuance and custody side.
Looking at private equity, Hamilton Lane came to market with its first Securitize-issued product: Equity Opportunities Fund V. The direct equities fund recently closed on $2.1 billion in January 2023 in the traditional offering. A small tranche of that was then tokenized and issued on a secondary basis on the Polygon blockchain with Securitize, and opened to investors with a 99.6% investment reduction minimum - $20,000 minimum in the digital offering vs. $5 million in the traditional fund. Hamilton Lane still has 2 pending products with Securitize (private credit, secondary transactions) and it will be interesting to see their choice of blockchain AND the investment model (another feeder fund?) selected.
Lastly, asset-backed securities platform Intain brought IntainMARKETS live on the Avalanche blockchain. Intain, who already has almost $6 billion of assets across WSFS Bank, UMB Bank, Wilmington Trust, and other parties on its ADMIN platform, now has an end-to-end lifecycle marketplace for mortgage-backed securities, structured products, and other comparable transactions. The firm is projecting issuer savings of 50-100 basis points on a deal-by-deal basis and has the goal of working with $10 million securitizations the same way they would $100 million securitizations. This will be an incredible value-driver in the MBS and ABS world, and Intain is positioned to onboard some serious distribution partners and channels.
The STA team would like to spotlight Intain for its work bringing IntainMARKETS live after growing IntainADMIN for the past few years. Much of the institutional adoption will come from the operational side and not necessarily the investable product side (at first) - given this, Intain did the legwork of onboarding almost $6 billion of assets for primarily operational cases.
We are excited to see how IntainMARKETS begins and grows from shuffling ADMIN assets over to working with major MBS providers and servicers. Intain’s work is applicable to a wide range of institutions and is particularly significant when looking at complex transactions and multi-layered tranches, which is common in the MBS and ABS worlds.
Keep an eye out for specific firm updates during the coming quarters as the industry sees greater adoption on the mortgage securitization side. It’s likely Intain will play a key role!
One of the brightest and best looking Security Token Advisors on the team, Nick Steffen has taken it to the next level this month advising clients on their tokenization servicing needs, marketing intentions and going the extra mile for his clients. Nick truly puts the N in token, embodying the values of a hard-working and lean tech startup while educating the masses on tokenization through his intense coverage of key security token media and thought leadership press issued on the Security Token Advisors and Security Token Market blogs.
If you are looking to 10x your potential in the tokenization space, look no further than our one and only Nick Steffen!
This month we'd love to feature our client, Sauvie, focusing on developing and commercializing immuno-oncology therapies critical to people with cancer. The Company plans to generate substantive value by executing on an expanding pipeline of critical cancer therapies via strategic acquisitions, partnerships, R&D, and commercialization
As we're all familiar, healthcare and research can require a hefty amount of funding, making them often subject to investment. Sauvie is exploring on how to raise more capital for these efforts and potentially opening the doors to all investors.
So what has STA done?
Educated Sauvie on the security token landscape
Found bio-tech and healthcare comparables
Explored tokenization vendors to work with and
more
Tokenizing healthcare can allow a wider investor audience, including patients and families, to participate in the financial upside of innovative research. Keep up with STA for further developments as well as future client spotlights... we have some exciting ones that we can't wait to be able to share!
How to Effectively Use Email Marketing to Promote Your STO
Security token offerings (STOs) are quickly becoming a popular way for businesses to raise capital. As more offerings become available, marketing is starting to play a key role in how they are introduced to the public. At the same time, marketing is a piece not many have thought about and only few are doing successfully.
Email marketing can be a great tool for businesses that are looking to launch STOs. It can help reach potential investors and provide them with information about the STO and its benefits. It can also be used to keep investors up to date on the progress and development of the STO.
Here are some tips on how to use email marketing to successfully launch your STO:
1. Start building an email list. Before you launch your STO, you should start building a list of people who may be interested in investing. This can include investors, industry professionals, and anyone else who may be interested in learning more about your offering. If you don’t know where to start, brainstorm on what platforms your ideal investor would be in and then begin marketing on them. Add a call to action to join your email list.
2. Create compelling content. Once you’ve built your list, it’s time to start creating content that will draw people in and get them excited about your STO. This can include educational content about the benefits of investing in a security token, or informative pieces about the specific features of your offering. You want to create as much hype as possible prior to your offering.
3. Track your results. As with any type of email marketing, it’s important to track the performance of your campaigns. This will help you understand which types of emails are working and which aren’t, so you can make adjustments as necessary.
By following these tips, you can use email marketing to successfully launch your STO and reach potential investors more effectively. Good luck!
Check out some great articles from the team! Just click the desired thumbnail and you'll be on your way... happy reading!
ANNOUNCEMENTS:
Assurely Webinar: Register for STA's upcoming webinar showcasing Assurely and how they adapt insurance to address the concerns and challenges hindering safe growth and widespread adoption of the security token industry.
Assurely's CEO, David Carpentier will be covering:
The "Why" behind Assurely
The Benefits Assurely Provides Issuers and Investors
Assurely's TigerMark and D&O Program
Because there's only a limited amount of seats left for the webinar we ask you RSVP before they fill up! This will be on February 15th, 2023 at 6pm EST
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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