Token issuance gets the spotlight –Cryptocurrency exchange Bitfinex is launching a new platform, Bitfinex Securities, allowing private companies to raise capital by going public via the issuance of tokens. Will this innovative move bear fruit?
Bitfinex Securities: making the stock market accessible to SMEs
On September 6, Bitfinex announced the launch of its new exchange platform, Bitfinex Securities. This will allow SMEs to list their shares, bonds or tokenized funds as well as to raise capital.
In other words, Bitfinex Securities lists the bonds or funds of private companies looking to go public through a token issue. Users of the platform can invest in and trade these tokenized securities.
Unlike tokenized stock offerings from exchanges, such as Bittrex Global and FTX, which list tokenized stocks of companies that are already public, Bitfinex Securities lists tokenized stocks, bonds or funds of companies that are looking to go public by issuing tokens.
In the interview with The Block media, Bitfinex Securities CTO Paolo Ardoino talked about the platform’s desire to compete with traditional exchanges, including the London Stock Exchange.
Temporary restrictions in a little-known jurisdiction
Bitfinex Securities will not be available to residents of the United States and other countries, such as Canada, Switzerland, Venezuela, Austria and Italy. Users of the platform will therefore have to undergo KYC.
According to Tim Aron, head of compliance at Bitfinex Securities, retail and accredited investors will be able to trade on the platform. However, retail investors will only be able to invest in tokens from companies that have published a prospectus for their fundraisings.
Bitfinex Securities is based in Kazakhstan and is regulated by the Astana International Financial Centre (AIFC) authority. Paolo Ardoino justified the choice of location by saying that Astana would be on its way to “becoming one of the financial capitals of Asia” and that it had “extremely rigorous” regulatory processes based on those in the UK, Dubai and Abu Dhabi.
Tim Aron further reported that the AIFC has granted a conditional investment exchange license to Bitfinex Securities. This authorization allows the latter to operate in a “highly controlled” environment until the full license is obtained :
“We need to limit the amount of fundraising to $15 million and the maximum number of clients to 1,000.”
Ardoino stressed that these limits are overall, not per issuer. Bitfinex Securities would thus reach the cap if 3 companies raised, on the platform, $5 million each.
Bitfinex is getting into the custom tokenized stock business on its own terms, while Binance has decided to remove stock tokens from its platform. Time will tell if Bitfinex Securities has found the right formula in terms of marketing positioning, but also legal strategy.
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