UPDATE (Dec. 13, 2019, 21:10 UTC): The SEC has granted TokenSoft’s registration, filing a “notice of effectiveness” on Friday.
UPDATE (Dec. 12, 2019, 22:50 UTC): This article has been updated to clarify the status of TokenSoft’s registration. The SEC has accepted it but not yet sent the company a notice of effectiveness.
Crypto startup TokenSoft has secured a key regulatory seal of approval as it seeks to build an investment bank for the age of tokenization.
A new TokenSoft subsidiary, DTAC LLC, has been registered as a transfer agent with the U.S. Securities and Exchange Commission (SEC), public filings show. The SEC accepted the registration on Wednesday and filed the notice of effectiveness on Friday.
Transfer agents act as intermediaries for parties in stock transactions. They can engage in activities like providing stock transfer services, book entries, order reviews, proxy voting, dividend disbursement and providing reports to fulfill regulatory and tax obligations.
Transfer agents like DTAC can also provide less conventional services, such as assisting parties who lose their crypto wallets.
“We service issuers who are doing both exempt offerings as well as registered offerings, so [this] was a request as well as a necessity,” said Mason Borda, CEO of TokenSoft.
TokenSoft joins a growing number of transfer agents in the U.S. who work with crypto startups, including BlockAgent, run by former Commodity Futures Trading Commission (CFTC) advisor Jeff Bandman, security token startup Harbor and technology provider Securitize.
However, Borda claims his firm’s technology will set it apart, since only DTAC may be able to manage tokenized securities whose private keys are kept offline, in so-called cold storage.
“DTAC will be issuing tokens using our Knox wallet,” he said. “It will be the only transfer agent that can securely issue and manage securities on the blockchain.”
Longer-term, Borda hopes to build out a 21st century version of Wall Street’s underwriters using TokenSoft and DTAC’s registrations, approvals and technology stack.
“We’re building all the things you need for an automated investment bank,” Borda said. “DTAC can help companies go straight to IPO by managing shares on the blockchain. We do have all the pieces necessary.”
TokenSoft already owns an interest in a registered broker-dealer, according to the Financial Industry Regulatory Authority (FINRA), the self-regulatory organization overseeing securities markets under the SEC’s guidance.
The company is authorized to provide a number of services around private placements of securities, according to FINRA.
TokenSoft, which has provided technology and advisory services for legally-compliant token sales since last year, plans to consolidate existing financial services infrastructure into a single service, such as using a blockchain tool for disbursement procedures.
“With DTAC we are able to provide more streamlined back office services,” Borda said.