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New digital security milestone achieved: first secondary trade on a regulated custodial exchange

Jan 11, 2019

It is no secret that digital securities (or security tokens) have the potential to truly transform capital markets. Utilizing blockchain technology, these compliance-friendly tokens can drive instant liquidity and unlock investment opportunities in private assets for investors around the world.

What is most exciting is that we are on the cusp of the industry’s boom and with that, a new milestone has just been achieved: The first secondary trade of a token on a regulated custodial exchange.

Just yesterday SharesPost, a regulated alternative trading system (ATS), facilitated the secondary trade of Blockchain Capital’s token (BCAP). The trade — which represents shares in the Blockchain Capital III Digital Liquid Venture Fund — is yet another case to prove that the industry has evolved from accepting digital securities as a concept to accepting it in practice.

This exciting development follows one of our own, which saw the first ever automated and decentralized trade of SPiCE VC’s digital security across two different marketplaces. The transaction took place thanks to Securitize’s DS protocol, which enabled all approvals and necessary checks to be done without manual intervention.

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BCAP’s Token Upgrade portal — powered by Securitize

BCAP was most recently upgraded with Securitize’s DS protocol, which is responsible for controlling the trades performed on these tokens to ensure that compliance restrictions are kept. In the case of a custody solution, such as the transaction on SharesPost, this required SharesPost being cleared and authorized by BCAP (the issuer) through Securitizes platform to be able to receive and hold the original investor’s tokens and process the trade.

John Wu, Chief Executive Officer, Ava Labs has said in the context of this new approach for Digital Securities:

““STOs represents the next evolutionary step in global finance. The technology might be new but the overall purpose remains the same: to help companies raise capital and investors to generate wealth in the most efficient way possible.””

As the landscape matures and more marketplaces emerge to facilitate regulated trades of digital securities, we will see the benefits of the technology impact the economy at large.

It is only a matter of time and that time is starting to look like now.

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