The Canadian Securities Exchange (CSE) announced yesterday, Feb.13, that they will soon launch a securities clearing and settlement platform based on the Ethereum (ETH) Blockchain that lets companies raise capital with security tokens.
According to the CSE announcement, companies using the Blockchain-based platform can issue Security Token Offerings (STO) to investors as a means to raise capital. Those issuing tokens via the CSE platform will “be subject to full regulation by applicable securities commissions”.
The CSE positions their STOs to companies as an alternative to running an Initial Coin Offering (ICO), which the exchange misleadingly calls unregulated.
The press release notes that the platform will benefit both “large, established companies,” as well as, “start-up entrepreneurs seeking to access the public capital markets for the first time.”
In conjunction with the new platform announcement, CSE has signed a Memorandum of Understanding with Kabuni Technologies, a Blockchain-based manufacturing platform that tracks 3D printed products, to be the first to issue STOs. Kabuni must first file a prospectus with the British Columbia Securities Commission (BSCE), and if approved, Kabuni’s issuing of an STO would “mark the first time a tokenized security has been listed for trading on a recognized securities exchange.”
In the US, the Securities and Exchange Commission (SEC) chairman Jay Clayton repeated last week in a Senate hearing that every ICO token that the SEC has seen is a security and thus must be registered with the SEC if it is to be offered to US investors. Clayton said the same thing in a statement December, 2017, also noting that, as of then, not a single ICO had yet to successfully register with the SEC, allowing them to legally offer securities to US investors.
Kodak plans to launch a regulated ICO and offer security tokens to US investors as an “exempt offering” under US law. According to the exemption, the Kodak’s security tokens do not have to be registered by the SEC as long as they are only offered to “accredited investors” — individuals with a net worth of over $1 mln.