Securitize Logo

The Protocol Newsletter Industry Spotlight: Securitize Markets

Read the latest edition of the Protocol Newsletter featuring Chris Wittenborn, CEO of Securitize Markets, as he discusses the nuances of issuing, investing in, and trading digital asset securities using a broker-dealer/ATS.

1. What is Securitize Markets and what does it do?

Securitize Markets is a FINRA registered broker-dealer with an ATS on file with the SEC. We are currently approved for Reg D, S, A, CF Primary Issuance and Secondary trading of Securities (Including Digital Asset Securities) for Accredited and Institutional investors.

2. What’s the difference between a BD/ATS that’s approved for digital asset securities and one that’s not from a regulatory and process perspective?

We are permitted to deal with what are called “Digital Asset Securities.” The record of ownership of these securities is managed by a registered transfer agent but also might include tokenization. This is pretty exciting for multiple reasons. Much like paper certificates shifted to more technologically advanced methods of recording ownership, tokenization in my opinion, offers an enhancement of this. It’s my belief that the utilization of tokens can help pave the way for increased liquidity in private markets. The reason for this is that most investors don’t understand the alphabet soup of regulatory exemptions and transfer restrictions associated with such securities. Tokenization could potentially assist these compliance aspects which would make regulatory transparency better and thus aid in the growth of these private markets - and to be clear, private markets are exploding. However, access to private securities still remains in the hands of very few.

3. Why are there so few BD/ATS approved for digital asset securities? What makes them special?

The idea of tokenization or Digital Asset Securities is relatively new. So maybe new is special and it’s special because it’s new?! All joking aside I believe we’ll see growth and additional approvals in this space. It’s our job to balance two things (amongst others). The suitability and ease of transactability for participants in this space while still maintaining adherence to the governing laws. There’s a major mismatch between the growth of private investment in the country as well as a decline of publicly traded companies. It’s my belief that tokenization affords us the opportunity to help close this gap. How? Well right now access is largely limited, the buying and selling process is confusing and cumbersome. Every day we are getting one step closer to the simplicity of adding private securities into a portfolio as easy as buying any stock or ETF and that to me is a major step forward in capital markets development.

4. What is the listing process, including requirements?

There’s too much to answer in just an interview! At an extremely high level and not all-encompassing, we are looking for Securities that were issued pursuant to the proper regulatory requirements, followed the proper KYC/AML procedures, and have an investment-worthy business model with a high-quality management team.

5. Does Securitize Markets require there be a token in order to list?

Nope! If the listing criteria are met - and one of those criteria is a management of record of ownership utilizing a Registered Transfer agent - we are permitted to list Securities with or without a tokenization requirement.

6. For private companies and funds looking to list on secondary markets, what advantages are there for going digital?

Currently, there is a vast amount of digitization in financial markets and the technology is only improving. If you break down the evolution of private market securities, originally there were paper securities that were cumbersome and generally only suited for accidentally losing or collecting dust in a file cabinet. Then modern Transfer Agent solutions evolved and digitized these paper securities making it easier for people to log in, check their accounts, and monetize the certificates without having to use snail mail amongst other things. The next frontier is pairing these electronic efficiencies and leveraging new technology such as programmatically enforceable smart contracts to help make some of the regulatory and compliance requirements more seamless.

7. Private capital markets are much larger than public markets, yet private market trading volume is over 300 times less than public markets - why do you think this is the case?

Simplicity and broader audiences. Public market trading is pretty easy for retail investors, including professional traders. Not to mention, simply buying ETFs or reallocating your 401k lends itself to individual stock trades. Within the private capital markets, there is a larger gap. Private investments may not be suitable for as many types of investors as public investments, so the audience is smaller. Furthermore, there are not as many secondary trading venues and the mechanics are more cumbersome than opening a simple brokerage account. I don’t think we’ll see the private markets become as liquid as the public markets, but I do think that liquidity will improve substantially over the next decade.

8. Why should a business or CEO of a Company care about Securitize Markets?

Securitize Markets can be helpful for companies that are looking to raise capital by issuing securities via a private placement. For more mature companies or those with existing private securities, Securitize Markets is a venue for secondary market liquidity. In a nutshell, this means we can both help companies raise capital as well as help the investors of companies exit their positions.

About Securitize Markets

Securitize Markets, LLC (“Securitize Markets”), is a broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”) and Securities Investor Protection Corp (“SIPC”). Securitize Markets is a wholly-owned subsidiary of Securitize, Inc. (“Securitize”) Securitize Markets is also a designated Alternative Trading System (“ATS”) by the Securities and Exchange Commission (“SEC”). Securitize Markets is approved to assist in the primary issuance of securities, including digital asset securities. Securitize Markets ATS is also approved for the secondary trading of private securities including digital asset securities.

Learn more about Securitize Markets here...

About Securitize

Securitize is reinventing private capital markets by delivering trusted end-to-end security token solutions that leverage our leading blockchain technology, which increases access to private markets for eligible investors while simultaneously making them more efficient, compliant, and liquid. Securitize is an SEC-registered transfer agent and its subsidiary, Securitize Markets, LLC, is an SEC and FINRA registered broker-dealer and alternative trading system (ATS).

To learn more, please visit our website.

This site is operated by Securitize, Inc. (“Securitize”), which is not a registered broker-dealer. Securitize does not give investment advice, endorsement, analysis or recommendations with respect to any digital securities. All digital securities powered by Securitize’s technology are offered by, and all information related thereto is the responsibility of, the applicable issuer of such digital securities. Neither Securitize nor any of its officers, directors, agents and employees makes any recommendation or endorsement whatsoever regarding any digital securities powered by Securitize’s technology. Nothing on this website should be construed as an offer, distribution or solicitation of any digital securities. Securitize does not provide custodial services in connection with any digital securities powered by Securitize’s technology.