A regulated alternative trading system (ATS) has facilitated a secondary trade of security tokens on a blockchain in a milestone for the development of this market.
SharesPost, a registered broker-dealer, ATS and registered investment advisor, said Wednesday it had executed its first secondary transaction with BCAP tokens issued by Blockchain Capital. The tokens, which run on top of the ethereum blockchain, represent shares in the Blockchain Capital III Digital Liquid Venture Fund.
SharesPost did not disclose the size of the trade for reasons of confidentiality, though SharesPost Digital Asset Group CEO John Wu told CoinDesk that it was essentially a proof-of-concept transaction. The Digital Asset Group is the division within SharesPost which oversaw the test.
“This was a small trade, it’s like a pilot program, we’re ‘running the water through the pipes’ to make sure,” he explained. “To our knowledge, this was the first trade of digital securities by an Alternative Trading System and broker dealer in which the ATS custodied the digital securities. This clears the path for companies to do compliant STO’s in the U.S. and provide their investors with secondary liquidity.”
While SharesPost is the first registered firm to also custody the crypto assets it traded, it is not the first to conduct a secondary transaction overall. OpenFinance Network, another regulated ATS and broker-dealer, already offers BCAP tokens for trade, according to a press release.
Previously, SharesPost offered custody of digital assets and support for over-the-counter trading (OTC) of digital securities. Next, the company intends to launch real-time trading order books.
The company claims that it will be able to provide sufficient liquidity for institutions or other accredited investors shifting into digital assets. In a statement, SharesPost founder and CEO Greg Brogger predicted that ultimately, digital securities will play a prominent role in private capital markets.
Speaking to the significance of the BCAP trade, he explained:
“Now companies can efficiently raise capital and provide liquidity globally by leveraging blockchain technology in a way that complies with securities laws. We are very excited to be connecting the more than 50,000 institutional and individual accredited investors using the SharesPost marketplace with companies and funds like Blockchain Capital that are leading the way.”
Blockchain Capital co-founder and managing partner Bart Stephens added in the announcement that “SharesPost is unique in its support of private companies and funds because they offer a comprehensive platform on which our investors can interact to enable liquidity.”
In particular, Stephens said SharesPost will benefit the investor community by providing data and analysis on issuers and assets listed on its platform.
Editor’s note:This article has been updated to note that OpenFinance Network has already conducted a similar secondary transaction, though it does not provide custody solutions.