An institutional investor trade involving BCAP, a token that represents interest in a fund created by Blockchain Capital, is believed to be the first secondary transaction of a security token on a regulated platform.
Securitized tokens versus non-securitized tokens are coming to the forefront in the industry, particularly with today’s SEC pronouncements from chairman Jay Clayton, who said, “From what I’ve seen, initial coin offerings are securities offerings. They are interest in companies, much like stocks and bonds, under a new label,” he said.
He also added: “Many ICOs are being conducted illegally. They are not following securities laws. Some say that this is because the law is not clear. I don’t buy that for a moment.”
Many ICOs are following the SAFT (Simple Agreement for Future Tokens) protocols, believing they provide a way to avoid the long registration process required by the SEC for securities. If Templum’s method passes muster, it could provide a better path for companies wishing to tokenize but within securities law parameters.
Blockchain Capital conducted an offering of limited partnership interests using Rule 506(c) of Regulation D, and Regulation S of US securities law. As a result, each BCAP token is a private, unregistered security representing a limited partnership interest in the fund.
The trade was conducted by Templum LLC, a technology company that offers regulatory compliant solutions for Tokenized Asset Offerings (abbreviated as TAOs). The transaction took place on Templum Markets and the Alternative Trading System operated by its affiliated company, Liquid M Capital.
TAOs are initial coin offerings that rely on exemptions from registration with the SEC via the safe harbor of Regulation D or Regulation S, or that are registered with the SEC and sold under Reg A.
Templum Markets provides Know Your Customer (KYC) and Anti-Money Laundering (AML) processes within its solutions.