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🌎 Tokenization is going global
May's updates from the STA team
Security Token Advisors
May 03, 2022
In this month's edition of The ReCap we'll be covering:
Industry News: Regulators are making some changes worldwide
Real Estate News: The real value in tokenizing real estate
Vendor of the Month: Sosnow & Associates
Advisor Spotlight: Jason Barraza
Client Spotlight: BlokHaus
Crypto Corner: Elon's Crypto-Friendly Twitter
Fun Fact: Minting on Solana
Announcements: Ask a Token Advisor and Tokenized Real Estate Masterclass
But first...
Good morning Security Token family! May has a lot promised for the industry, given that we just saw a record jump to $20 Billion in secondary trading assets. That’s a 20x jump over the beginning of the year and a sign of growth that many in the industry have been anticipating for some time. We even see increased interest in making capital markets better from Washington with the JOBS Act 4.0, something that I believe is another game changer in the making.
Conferences and workshops are also back since the pandemic and have proven to be a powerful way to bring the industry together and teach starry-eyed newbies the intricacies of tokenization. Security tokens are starting to have their moment in the sun and still most are not paying attention. This is slowly changing and will not stop.
Time for Wall Street and Main Street to finally acknowledge the “Blockchain Bull” in the room.
Best,
Founder and CEO, Security Token Advisors
By John Pittman AKA "The Token Advisor"
Two of the biggest players in the industry have decided to join forces and collaborate to bring even more innovation to the space. “The INX team has been at the forefront of innovation in the US digital securities space. We believe that Stokr’s collaboration with INX will allow digital securities issuers to access both the EU and the US investment market in a regulated and standardized manner,” said Stokr co-founder and CEO Arnab Naskar.
The European Digital Assets Exchange - EDSX - has completed the compliance procedure to provide a secondary market for security tokens for institutional and retail investors and plans to open it in Q3 2022. There are many providers offering tokenization services but without the possibility to list the tokens. EDSX is already providing a primary market and will open the secondary in a few months.
The European Parliament (EP), the European Securities and Markets Authority (ESMA) and the industry are backing the EU’s efforts to create a pilot regime for financial market infrastructures based on distributed ledger technology (DLT) (“the DLT Pilot”). This pilot regime aims at developing the trading and settlement of “tokenized” securities.
The JOBS Act 4.0 aims to: Encourage companies to be publicly-traded – includes eight initiatives to encourage companies to become publicly-traded, particularly during earlier growth stages, when investors have the chance to earn the highest returns. Improve the market for private capital – includes six initiatives to reduce costs associated with seeking capital by appropriately tailoring regulations for small businesses. Enhance retail investor access to investment opportunities — includes eight initiatives to prevent retail investors from being excluded from certain investment opportunities. Improve regulatory oversight — includes seven initiatives to enhance investor protection and privacy and to update outdated statutory and regulatory provisions.
Yoshi Markets Limited, a Multilateral Trading Facility (MTF) and custodian for virtual assets, regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (FSRA) announced the signing of an agreement with Tezos Gulf. As per the agreement, Yoshi Markets and Tezos Gulf will develop and offer a solution to tokenize assets using the Distributed Ledger Technology (DLT) for trading, custody and settlement of digital security tokens.
During the month of April, we saw the secondary market cap bounce from around $3 billion to over $20 billion. In a single month. Normally we’d assume that the real estate industry and its numerous security token offerings deserve the credit for this feat. But not quite. This jump was on the back of Enegra’s tokenized equity position surrounding a commodities trading platform.
Nonetheless, the Real Estate industry has been busy on the primary market side, which is where the real ammo lies (don’t tell our friends over at Security Token Market that I said that). RedSwan announced the launch of Apollo Apartments, a 255-unit apartment building just north of Seattle. This market-rate offering targets an IRR of 24% with a minimum investment amount of just $1,000, “an institutional-level asset that is rarely available to individual investors.” This new construction property will be managed by Edmonds Development LLC, and the listing can be seen in action here.
On the blend between traditional real estate and DeFi, the team at RealT, whom we commonly cite for their pioneering actions, put another tally up for the record books this past month. RealT announced the launch of the RealT Money Market (RMM)—an open-source solution to decentralized lending and borrowing powered by real estate security tokens. Decentralized borrowing and lending is such a powerful and interesting development, but the common limiting factor comes down to the feasibility of relying on cryptocurrencies themselves as collateral.
In theory, real estate should be less volatile in the short term than something like ETH, AVAX, ALGO, SOL, or other crypto assets. By leveraging tokenized real estate in the same lending protocols that have been successfully facilitating loans against cryptocurrencies, the tokenization industry gets a huge bump. Now the narrative surrounding tokenization isn’t solely “early liquidity” or “fractional ownership,” but rather extends to the use of these assets as collateral. In my opinion, this brings even more value to both traditional investors and digital asset investors, as it completely changes the way owners (and even lenders) may view their assets—and more importantly, it changes the way owners may make USE of their assets.
RealT developed this RMM in partnership with Aave, one of the most renowned DeFi lending services across the globe, to be rolled out across all security tokens, not just real estate. However, being a real estate firm itself, RealT will likely put its own assets to use first, with other tokenized properties to follow, and eventually tokenized assets like PE/VC shares and pre-IPO shares. RealT has one of the strongest investor communities in the game, so keep an eye on RMM developments and increased volume or growth in the Total Value Locked (TVL) of RMM-driven liquidity pools.
As a final note, I will be speaking on the tokenization panel at Realcomm’s annual “Intersection of Commercial and Corporate Real Estate, Technology, Automation and Innovation” conference on June 15th in Orlando, FL. If anybody is local and around, connect with me on LinkedIn or Twitter (@pgaff_digital) and let’s talk tokens.
Since we always tout regulation and compliant offerings at the intersection of private placements and blockchain technology, it’s important to credit and salute those who enable the process in the first place. This month, the Security Token Advisors team is celebrating Robin Sosnow and her team at Sosnow & Associates. Robin is a trailblazer in the private placement space in general, having been involved in equity crowdfunding since 2013 right around the start of the JOBS Act of 2012 implementation. The JOBS Act is one of the hallmarks to equity crowdfunding and to many of its fundraising derivatives that we know and utilize today.
Robin’s foray into the blockchain sector came in 2017, where she focused on supporting businesses who seek to utilize blockchain technology to migrate their cap tables on chain, issue digital blockchain tokens representing equity or other economic rights, and offer liquidity solutions to their shareholders through secondary market listings.
Robin has been a key component of the STA network (personally and professionally!), and her reputation precedes her around the Miami Tech community and beyond. Being involved in both securities offerings and NFT structurings, she can play both sides of the coin while bringing a wealth of knowledge to the individual projects. We are very fortunate to be close to Robin and look forward to molding the future of private capital markets alongside her.
We are so excited to announce the May Advisor of the Month: Jason Barraza
The youngest and newest addition to our team, Security Token Advisors was truly complete when we got Jason. Coming from a consulting and entrepreneurial background, Jason also worked at the Launch Pad and has helped consult over 100 businesses evaluating business plans and identifying potential avenues for change and improvement.
Jason is another University of Miami Alum, graduating in 2021 in finance and business analytics. Even before Jason officially joined the team he was one of the gang. Always quick to help us whenever we needed it (some of us didn’t even know he had another job).
He is so much more than just Head of Growth & Operations, he has experience in e-commerce, web design & has single handedly improved the way all of STG operates and internal communications.
Jason recently launched his own show called Crypto Con Leche which is our first all-Spanish show!
Tune in to new episodes of Crypto Con Leche, every Thursday on the Security Token Market YouTube channel! Here’s the latest episode now: https://youtu.be/iQniD3QCllU
BlokHaus is a Miami Beach full-service real estate firm. They are modern, technologically-adept, and have expertise in both residential and commercial real estate. Although global, they do specialize in South Florida luxury properties.
Because of this they pursued a real estate token investment platform with Security Token Advisors where investors can buy BlokHaus Real Estate Tokens (BRET) for as low as $1000 USD. Each token represents fractional ownership in physical properties thus granting the holder monthly dividends from the rent collected.
Tokenized real estate investments allow more people to have a piece of the pie at a lower cost to entry while giving issuers the ability to raise capital from a wider breadth of investors. Everyone has the opportunity of early liquidity thanks to the blockchain and security tokens.
So what did STA do for BlokHaus?
Security Token Advisors helped Juan through exploring the industry landscape, wireframing the platform, structuring the BRET's first tokenized property, and connecting with the right partners among other things.
These steps are needed to vet and onboard issuers, qualify and manage investors digitally, prepare the right legal documents and investor structures, have embedded tokenization tools, and offer a user interface for investors and issuers separately.
After creating the platform STA helped create a marketing plan to educate potential investors on the power of tokenization and the BRET in partnership with our sister company, Security Token Market.
Meet BlokHaus Broker-Principal Juan M Alvarez, a leader in the space through his extensive experience and now this endeavor:
Master of Science in International Real Estate (MSIRE)
Master of Science in Finance (MSF)
Fintech-Certified from Harvard University
Over 15 years of experience brokering luxury residential and commercial real estate
Over 11 years of experience working with top Miami and New York brokerages
Lead transactions for a total volume of over $400M
If you'd like to learn more or register your interest in participating in BRET, click below!
If you haven’t heard, Elon Musk bought Twitter a few weeks ago. Not only is this a big deal in social media and elite discourse, but it is very relevant to the crypto world.
First, one of Elon’s first goals is to fix the crypto spam bot issue, saying they are the “single most annoying problem on Twitter.” He also tweeted: “If our Twitter bid succeeds, we will defeat the spam bots or die trying!”
Second, Elon is considering adding a Doge coin payment option for Twitter Blue. And Finally, some have speculated that he may even Tokenize Twitter itself to give the people more power. We’ll all see soon enough what else he had in store for his new asset.
Did you know Solana doesn’t require a smart contract to mint an NFT?
They use a different process called the Metaplex protocol instead.
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 👇
Masterclass in Miami
In collaboration with @DigiSharesDK and @urblandia, Security Token Advisors is happy to announce our participation in a masterclass and networking mixer centered around Real Estate Tokenization.
Where: Red Rooster in Miami, FL
When: May 12, 2022 6pm-9pm
