Another regulated platform for token trading is coming to the U.S. market.
Revealed exclusively to CoinDesk, blockchain technology firm Templum and affiliate broker-dealer Liquid M Capital are today unveiling the platform, also called Templum - the second launch in as many weeks to focus on bringing a new level of functionality and maturity to the cryptocurrency asset class.
Following close behind the launch of an alternative trading system (ATS) by tØ, the capital markets arm of U.S. retail giant Overstock, the platform also seeks to allow investors to exchange any cryptographic token categorized in the U.S. as a security. Not only will Templum allow users to trade tokens on a secondary market, but it will allow them to issue new tokens through initial coin offerings (ICOs).
In this way, the new ATS - which will be regulated by both the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) - aims to offer access to the full lifecycle of cryptocurrency security tokens.
Christopher Pallotta, founder and CEO of Templum, told CoinDesk:
"We know regulation is coming. So, we are trying to find a solution to work with the current ecosystem right now - so as to not hinder the extraordinary developments that we've seen over the last several months."
The announcement follows on a wave of interest in the use of cryptocurrencies as a funding vehicle, with data from CoinDesk's ICO Tracker indicating more than $2 billion has been raised through such sales to date.
Not only does Templum aim to tap that market, but it's seeking an appeal in secondary markets for the trading of tokens. According to CoinMarketCap, the combined market capitalization for all tokens is approximately $8.7 billion at press time.
And, while most of those tokens don't advertise as securities, Templum would be limited to those that are.
Yet, far from a deterrent, many industry analysts believe the more the sector matures (with regulators defining rules and requirements, and platforms launching to accept those regulated forms), more ICOs will want to be classed as securities.
Vincent Molinari, CEO of Liquid M Capital, recognizes that, saying bringing cryptocurrency tokens under existing securities law will provide a host of benefits to both issuers and investors alike.
In his view, securities law provides a "robust framework" for token issuance, one that will eliminate the need for issuers to reinvent the wheel from a regulatory perspective each time they issue a new security token. Specifically, he pointed to the importance of anti-money laundering and know-your-customer requirements for keeping bad actors out of the system, and investment suitability requirements that look to mitigate fraud.
Several regulators seem interested in removing those hurdles as well, including those in Quebec, who recently accepted a company looking to launch a security token into its regulatory sandbox and even bending some of the rules for that sale.
These efforts, though, stand in stark contrast to other countries, such as China, which issued an all-out ICO ban early in September.
Molinari continued, adding that a regulated trading solution for ICOs - in both primary and secondary markets - will provide a clear, legally sanctioned way for firms to raise money, which in turn, facilitates capital formation.
"You can lose money in any investment. Especially when you get into the speculative end of the continuum - but you're reducing your risk of fraud and bad actors by going through regulated entities."
Ash Bennington contributed reporting.
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