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Openfinance, the secondary market for trading digital alternative assets, announced it will be opening up trading of third-party digital securities to U.S. Investors, making it the first trading platform to do so.
The company already supported the trading of third-party digital securities (securities that have been migrated onto the blockchain that are now traded on Openfinance’s blockchain-based platform) in Europe, but was unable to provide the same capability in the U.S. due to minimum holding periods for new tokenized securities required by U.S. regulators.
Now that the holding periods are up for two of the first security token assets traded on Openfinance — Blockchain Capital’s BCAP security token and SPiCE VC’s SPiCE token — both accredited and non-accredited investors in the U.S. will be able to access and trade both securities through the Openfinance network.
The BCAP and SPiCE tokens are the first of several digital securities that will soon be tradeable through Openfinance, as minimum holding periods conclude for a multitude of other assets that are currently tradable for the platform’s non-U.S. investors.
As a result, Openfinance will be able to relieve significant pain points for those looking to sell digital alternative assets, who often are forced to sell at prices significantly below the asset’s true value due to poor liquidity.
“The ability for U.S. investors to trade these digital assets and access liquidity marks a significant next step in the evolution of the digital securities market,” said Openfinance founder and CEO Juan Hernandez.
The launch is one of several firsts for Openfinance, which was also the first company to facilitate a secondary market for tokenized securities, and was also the first secondary market for digital alternative assets to become regulated by U.S. agencies.
Unlike previous players in the digital securities space that seemed averse to government oversight, Openfinance represents a growing set of new companies that see a regulated future for the sector.
As a registered Alternative Trading System (ATS) regulated by the SEC, one regulatory step below a national exchange like a NASDAQ or NYSE, Openfinance is hoping to become the go-to resource for investors looking for safe, stable access to digital securities or those looking to better understand rules related to unregulated securities.
“We’re selling two things: liquidity and legitimacy,” Hernandez told TechCrunch.
The company’s regulated position also allows it to play a more influential role in shaping the standards around the digital security asset class. As an ATS, Openfinance can set requirements for assets looking to get listed on its platform, such as potentially requiring audited financials or otherwise.
As liquidity for digital securities improves and as regulatory agencies continue to provide more guidance around the rules that govern them, Openfinance believes more institutional players will begin to get involved in the asset class as well.
Longer-term, the company is hoping to support much more than just token securities on its platform. “We look at security token offerings (STOs) as proof of concepts of our technology,” Hernandez told TechCrunch. “Can you compliantly list it on-chain? Can you trade it on-chain? We think yes because we’ve proved it out — we’ve accomplished proof of concept.”
Down the road, Openfinance has its eyes set on the broader alternative asset class, including anything from digital securities issued by pre-IPO companies to those of VC firms and hedge funds. Openfinance believes that every investor should be able to access these traditionally exclusive assets, rather than just a small set of insiders or those backed by significant amounts of wealth or capital.
“Openfinance is democratizing the space and making these opportunities available to a broader universe,” said Hernandez.
“We’re bringing access, transparency and liquidity to this market and that’s what we want to do longer-term.”