Polymath, a securities token launch pad, and SPiCE VC, a liquid security tokenized VC fund, are launching an industry initiative.
Together, the companies will work on implementing governance mechanisms for security tokens, work with regulators on improved frameworks for security tokens in major jurisdictions, improve on protocols and standards for securities tokens, and work with exchanges to support their regulatory needs.
“SPiCE VC is one of the first security tokens to be issued in the market, disrupting the traditional VC model by making it liquid on the blockchain,” SPiCE VC co-founder and managing partner Carlos Domingo said.
“We believe that this will be the predominant way for people to digitize all their assets in the future, and we will make significant investments in companies supporting and developing this space. However, a lot of the infrastructure is missing so we are very happy to join hands with a company like Polymath and with others who share our vision about the future of this industry in building the ecosystem that will drive the industry forward.”
Both Polymath and SPiCE VC believe that regulation-compliant security tokens are the future of the token world, with a potential that is orders of magnitude larger than the previous wave of utility tokens.
“Unlike utility tokens, which are suitable for relatively few use cases, security tokens can eventually be relevant for almost any company, fund, or asset,” Mr. Domingo added.
“The main restriction of utility tokens, which are typically borne from an Ethereum powered Initial Coin Offering, is they are not applicable for all companies because they do not offer dividends or other similar economic rights of ownership,” Polymath CEO Trevor Koverko said. “Security tokens, on the other hand, can offer ownership in all types and forms of assets with an existing regulatory framework in place. The potential market of assets subject to being tokenized as securities dwarves today’s cryptocurrency market.
“Polymath and SPiCE VC aim to bridge this gap. Polymath’s pipeline of issuers interested in launching a tokenized product will benefit greatly from SPiCE’s resources, evidenced by their success in navigating their own security token offering. We are excited to partner with a like-minded pioneer and work together to help scale this early-stage market, which is currently a small fraction of the size of the much-larger utility and app token markets.”