Ontario Regulatory Green Lights First Security Token Startup

Ontario Regulatory Green Lights First Security Token Startup

The Ontario Securities Commission has approved a security token trading platform for Ontario residents only. The pilot program, called ‘FreedomX,’ will run until April 17th 2021. KYC/AML processes is required and, if successful, will expand to other areas. The company responsible for filing the request for approval was TokenGX.

Unlike most other secondary marketplaces, the new security token platform will target both retail institutional investors. Retail can only invest up to $2,500, but still a sizeable amount nonetheless.

The FreedomX platform will be powered by the Ethereum blockchain, built by a company called TokenFunder.

The news was welcomed in the security token industry and may signal a change of heart among regulators in Canada. As Laura Pratt, Co-founder of TokenGX, explains.

“As part of the current Creative Destruction Lab blockchain cohort, our FreedomX platform will define the next generation of trading in Canada and unlock enormous value in the private markets. We envision a world where all assets will be tokenized and tradeable.”

Alan Wunsche, also Co-Founder of TokenGX, echoed similar thoughts:

“TokenFunder’s leading edge security token issuance platform has a full investor onboarding and investing experience for retail and accredited investors. With today’s announcement, TokenFunder will now power the FreedomX secondary trading marketplace. With digital shares recorded on a public blockchain, we will not only dramatically reduce the cost of capital for Issuers compared to traditional platforms, but also provide liquidity through the secondary trading marketplace, which also includes critical ongoing management disclosures and investor relations services for our Issuers.”

Canada is not known for making the news in the security token world. This past April, a Canadian-based crypto-asset portfolio manager announced it would be holding an STO.  The Bank of Canada has been toying with blockchain concepts, however, as part of JPMorgan’s new initiative, the Interbank Information Network (IIN). 

For more information: https://thetokenist.io/ontario-regulatory-green-lights-first-security-token-startup/

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What is a Utility Token?

 

Utility tokens are simply app coins or user tokens. They enable future access to the products or services offered by a company. Therefore, utility tokens are not created to be an investment.

 

Just like an electronics dealer might accept orders for a video game that will be released several months later, a startup can create utility tokens and sell digital coupons for the services or products it is developing.

What is a Security Token?

 

A security token is a digital asset that derives its value from an external asset that can be traded. Therefore, these tokens are subject to federal laws that govern securities. Failure to comply with these regulations could result in severe consequences including penalties and potential derailment of the development of a project.

 

Security tokens can offer a vast array of applications if the startup abides by all the regulatory requirements. The most promising of these features is the ability to offer tokens as a digital representation of shares of a company’s stock.