Tokenized Asset Firm Securitize Acquires Stock Transfer Company

The deal for Pacific Stock Transfer turns Securitize into a top 10 player in an obscure corner of the capital markets.

Feb 22, 2022 at 1:30 p.m. UTC
Updated Feb 22, 2022 at 3:18 p.m. UTC

Ian Allison is an award-winning senior reporter at CoinDesk. He holds ETH.

Blockchain-based securities firm Securitize has acquired Pacific Stock Transfer, a company that manages the account balances of investors and certificates of security ownership. The financial terms of the deal weren't disclosed.

This latest acquisition by Securitize, which raised $48 million in a funding round last June, makes the firm a top 10 U.S. stock transfer agent, serving 1.2 million investor accounts and 3,000 clients, according to a press release.

Securitize has had a long relationship with Pacific Stock Transfer, which will continue to operate under its current brand. The services Pacific Stock Transfer now offers will continue to be provided by the same team, the companies said.

The Securitize deal is another step in equities markets moving away from a paper-based past to a blockchain-based future. In this case, it’s about digitizing the whole legally complicated and manual process of proving share ownership, paying dividends and compiling tax reporting documents.

New approach

The role of the transfer agent is a not-so-well-known part of capital markets, because most companies aren’t exposed to them until they go public. It also means most people don’t know just how inefficient these firms are, said Securitize CEO Carlos Domingo.

“I think that has created a situation where these traditional transfer agents have built monopolistic situations,” Domingo said in an interview with CoinDesk. “These traditional transfer agents are not incentivized to change because the way they make money is by inefficiencies. The issuers are not the ones suffering the problem, but the investors.”

Domingo cited the recent BuzzFeed debacle, where investors found themselves unable to sell their shares after the company’s initial public offering, as an example of transfer agent iniquity.

Another example is where the paying of dividends inefficiently makes money for some very large transfer agents, since $5 billion in Apple dividends, for instance, earns the agent interest in a bank account where it sits for a couple weeks.

“The foundation is digitizing the securities,” Domingo said. “Because once the securities are represented on the blockchain, using wallets and tokens and managed by smart contracts, then everything else, like paying dividends very efficiently or providing liquidity, comes on top of that.”

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Ian Allison is an award-winning senior reporter at CoinDesk. He holds ETH.

CoinDesk - Unknown

Ian Allison is an award-winning senior reporter at CoinDesk. He holds ETH.

Trending

1
CoinDesk - Unknown
Coinbase Has ‘Structural Advantage’ Over Competitors, Cowen Analyst Says

Stephen Glagola gave the crypto exchange an outperform rating and $85 price target.

Stephen Glagola gave the crypto exchange an outperform rating and $85 price target.

CoinDesk - Unknown
2
CoinDesk - Unknown
Tether Enters Latin America With Mexican Peso-Pegged Stablecoin

The country’s multibillion-dollar remittances business and difficulties in transferring money create a “unique opportunity," the company said.

The country’s multibillion-dollar remittances business and difficulties in transferring money create a “unique opportunity," the company said.

CoinDesk - Unknown
3
CoinDesk - Unknown
Fed Vice Chair Lael Brainard Says CBDC Could Coexist With Stablecoins

A well-designed central bank digital currency could complement stablecoins and cash, Brainard will say in front of the House Committee on Financial Services on Thursday.

A well-designed central bank digital currency could complement stablecoins and cash, Brainard will say in front of the House Committee on Financial Services on Thursday.

CoinDesk - Unknown
4
CoinDesk - Unknown
Ark 21Shares Backers Take Another Shot at Spot Bitcoin ETF Approval

The initial application for a spot bitcoin ETF was rejected in April.

The initial application for a spot bitcoin ETF was rejected in April.

CoinDesk - Unknown