P Xenos and M Bacina
Ontario Onward towards First Regulated Security Token Startup
The Ontario Securities Commission (OSC) has green lit TokenGX’s request to facilitate secondary-market trading of security tokens. The platform will be released as a pilot program supporting security tokens until 2021.
The pilot program, called ‘FreedomX,’ will run until 17 April 2021 and is restricted to Ontario residents only. KYC/AML requirements will apply, and unlike most other secondary marketplaces, the new security token platform will target both retail and institutional investors.
The FreedomX platform was built by a company named TokenFunder, and will be powered by the Ethereum blockchain.
This news was viewed to be a significant regulatory turning point, signalling a change of heart among regulators in Canada. Laura Pratt, Co-founder of TokenGX stated that:
As part of the current Creative Destruction Lab blockchain cohort, our FreedomX platform will define the next generation of trading in Canada and unlock enormous value in the private markets. We envision a world where all assets will be tokenized and tradeable.
Alan Wunsche, also Co-Founder of TokenGX, echoed similar thoughts:
With digital shares recorded on a public blockchain, we will not only dramatically reduce the cost of capital for Issuers compared to traditional platforms, but also provide liquidity through the secondary trading marketplace, which also includes critical ongoing management disclosures and investor relations services for our Issuers.
Although Canada is not known for boasting a large amount of cracking headlines around the crypto news sphere, this past April a Canadian-based crypto-asset portfolio manager announced it would be holding an STO. The Bank of Canada has also been experimenting with some blockchain proof of concepts, as part of JP Morgan’s new initiative, the Interbank Information Network (IIN). Toronto is of course the home of Vitalik Buterin, one of the co-founders of Ethereum.