Security token firm Securitize said on Tuesday it got the green light from the US regulators to move forward with a duo of acquisitions, a broker-dealer and alternative trading system for digital assets.
The San Francisco-based startup, which helps firms tokenize their securities and assets, got such an endorsement to buy Distributed Technology Markets (DTM) in a bid to enter more regulated markets and reach institutional investors.
Distributed Technology Markets is part of a family of companies, and the acquisition will include taking over its sister company, Velocity Platform, which runs a money services business with money transmitter licenses in several states.
As part of the takeover, the newly acquired entity will be renamed Securitize Markets, which will offer a complete digital suite of services from primary issuance through secondary trading. Jonathan Kelfer, Co-founder and former CEO of Velocity Markets, has been named as the firm’s new CTO.
Securitize will soon be capable of offering blockchain-based securities and at some point to develop its own secondary marketplace, under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). This process gave the company firsthand insight into such processes.
Regulators Clear Security Token Trading Systems
“By integrating Securitize Markets into our existing digital transfer agent platform and services, we can now offer a seamless digital solution for issuers and investors that dramatically improves the experience compared to the poorly digitized processes that are being used today,” said Securitize CEO and co-founder, Carlos Domingo.
Chris Wittenborn, CEO of Securitize Markets, also noted: “Securitize Markets is continuing the initiative of working hand in hand with regulatory bodies to construct a compliant capital markets framework for private securities – including digital asset securities. We’re excited to join forces with Securitize in an effort to continue developing this market.”
Securitize will capitalize on DTM’s regulatory approval to operate as an alternative trading system (ATS), which facilitates transactions in securities that are not publicly-traded. It creates a way for companies to tokenize equity and issue it on a blockchain without running afoul of regulatory obligations.
Many Fintech and blockchain firms have responded to US regulators’ classification of certain digital tokens as securities and therefore coming under the SEC’s supervision. Wall Street’s top watchdog says that any entity that wants to become an ATS needs to register with the SEC as a broker-dealer and become a member of a self-regulating organization, such as FINRA.