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Goooood Morning, Rainmakers! ☀️

As always, we have two captivating topics for you to dive into:

1️⃣ 🪙 Tokenized Equity for XRP: Linqto

2️⃣ 👩‍⚖️ New House Bill: Financial Innovation and Technology for the 21st Century Act

Without further ado, it's time to…

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🪙 Tokenized Equity for XRP: Linqto

It’s only been a couple weeks since the Ripple ruling and there’s already someone ready to accept XRP for a security token offering: Linqto.

Linqto is going to set up a pilot tokenized private equity offering in the coming months, except the only payment method accepted will be XRP. To do this they’ll set up a special purpose vehicle (SPV) and firewall it from the existing business/operations (good call in case it goes south).

Who’s custodying this?

Glad you asked! Linqto is choosing PolySign as its 3rd-party custodian. When they offer this to other brokers, they’ll be required to use PolySign as well or another trusted custodian. No info has been given on which custodians are “trusted” from their point of view yet.

After the Ripple ruling Linqto’s COO has expressed his bullish views on XRP. First in this use case of being able to accept XRP without concern of it being a security but also in the case of banks!

He argues banks will be able to use Ripple’s On-Demand Liquidity (ODL) for instant cross-border payments. In my opinion it’s a bit early to declare banks are in the clear for such a use-case. Let’s also remember acting Comptroller of the Currency Michael Hsu recently expressed his strong preference for private-permissioned blockchains over public ones for the banking sector.

Regardless of ODL’s chances at banks implementing it, it’ll still be interesting to see a security token offering accept XRP as payment. Props to Linqto for taking advantage of the recent ruling. Goodspeed Linqto!

👩‍⚖️ New House Bill: Financial Innovation and Technology for the 21st Century Act

In light of all the regulatory clarity happening around the world, another bill (212 pages) has been introduced to the house by members of the Agriculture and Financial Services Committees. In an explainer document they even said:

So what does this bill say?

In short, it creates a framework for digital assets and separates what the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) can cover. It also creates a path for coins/tokens starting off as securities to trade as commodities, mainly if they are decentralized.

In addition, there will be stronger disclosure requirements for market participants and depending on the circumstances some may have to register with both the SEC and CFTC.

Glenn Thompson, Tom Emmer and Warren Davidson are the other sponsors of the bill. Out of these 3, let’s remember Tom Emmer just proposed his Securities Clarity Act to the House which seems to be in agreement with the portion of this bill about coins/tokens trading as commodities even if they start out as securities. For more on the Securities Clarity Act, check out What’s Drippin’ from early June!

Something else that caught my attention in this Financial Innovation and Technology for the 21st Century Act is that there will be a study done on NFTs and how they fit in with our financial ecosystem. I’m curious to see the results but if I had to take a guess it’ll have something to do with digital identity and ownership of whole, unique assets such as residential real estate.

Not finance-related but some wishful thinking: NFT’d drivers licenses would be amazing! Who else hates going to the DMV? I do! 🙋‍♂️

Have any thoughts on this? Let me know on Twitter @Jason_Barraza_

💦 What else is Drippin’

Platform Spotlight: Securrency - STA Success Network

The STA Success Network will be hosting a spotlight on Securrency this Wednesday, July 26th at 1pm EST.

Securrency rang in the New Year with a new CEO - Nadine Chakar from State Street Digital. Nadine’s appointment comes shortly after WisdomTree, Inc. announced 9 new SEC-approved blockchain funds with Securrency Transfers, the transfer agent arm of Securrency.

Peter Gaffney is looking forward to discussing the firm's patented Compliance Aware Token (CAT) and institutional control location services for security tokens with Beralda Kokoshi.

Have questions for Beralda? Email them to Peter ([email protected])!

This is a Success Network Members-Only Event, available under both the STA Insights and full Success Network plans.

Compliance in Security Tokens

The STA Success Network will be hosting a webinar around compliance this Thursday, July 27th at 12pm EST.

Security tokens are exactly that - securities. This comes with a variety of measures that need to be taken to remain compliant and help prevent regulators from knocking on one's door. This ranges from the issuance of the security to the platforms hosting them as evidenced by recent SEC headlines.

Matthew Unger and Adrian Alvarez both work in web3 compliance through iComply and InvestReady respectively, building infrastructure for the future of finance. Have questions? Email [email protected] 

State of Security Tokens 2023 - Q1 Extended Report

The Security Token Advisors State of Security Tokens 2023 - Q1 Extended report is brought to you by Provenance Blockchain Foundation!

Our Head of Research and Institutional, Peter Gaffney, dives deep with updates from across the industry, from issuers to platforms to protocols. This piece will detail the macro trends taking shape within the tokenization space as a function of service providers like transfer agents, broker-dealers, alternative trading systems, custodians, and third-parties, as well as issuers, blockchain foundations, asset managers, investment banks, and activity that Security Token Advisors sees on its advisory side

Take a read for analysis on common themes emerging for both primary and secondary markets! 👇

This is not financial or investment advice.

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If interested, please reach out to [email protected] to find out a way we can collaborate together :)

Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.