Digital Token Exchange Claims First SEC-Compliant TradeBy
Templum LLC, which operates a digital-assets exchange, said it executed the first trade on its platform, which complies with U.S. securities regulations. The trade was between two institutions that exchanged BCAP tokens issued by digital assets investment firm Blockchain Capital LLC.
“We believe this is the first security token to trade in a fully compliant platform,” Chris Pallotta, co-founder and chief executive officer of Templum, said in an interview. “We’re embracing regulation to provide a secure market and a level of comfort for both investors and issuers that hasn’t been the norm in the digital assets market so far.”
Templum has an ownership stake and is an affiliate to Liquid M Capital. All security transactions are conducted through Liquid DBA Templum Markets, a broker dealer fully approved in all 50 states and other foreign jurisdictions. It has approvals to conduct private placements through electronic means. It is also a fully approved alternative trading system for private and unregistered securities.
Templum joins a growing ecosystem of firms vying to position themselves as leaders in digital assets trading as the market matures. Overstock.com Inc. said it is also building an Securities and Exchange Commission-compliant digital assets exchange through its subsidiary tZero. These firms are trying to lure institutional investors who have mostly stayed on the sidelines but are starting to look at the sector as bitcoin futures started trading last year in major U.S. exchanges, while the SEC is still reviewing a long list of cryptocurrency exchange-traded funds waiting for approval.
Startups have raised almost $4 billion through the sale of digital tokens, known as initial coin offerings, with most of the sales happening last year, according to Coin Desk.
Most teams doing ICOs say they’re issuing application tokens, or tokens made to be used in a platform, and so they don’t need to follow securities regulations. But the SEC has already cracked down on token sales that constitute securities offerings, as the tokens don’t have a real use on a platform, and represent a stake in a company or fund, much like a stock.
Templum’s and Overstock are betting that companies will increasingly issue tokens that are compliant with SEC regulations, known as securities tokens, and that they’ll need a venue in which to trade them.