Digital security platform Securitize will become the first entity to enable tokenized securities in the European Union – as well as the US. Securitize has been approved for tokenized assets under an EU pilot regime. The company holds security licenses in both the US and Europe. Securitize is participating in the Spanish Securities Sandbox, as provided by the Spanish General Secretariat of the Treasury and International Finance under CNMV supervision for digital asset securities. The Sandbox participation was announced last month.
Securitize is currently registered in the US as a stock transfer agent, broker-dealer, alternative trading system (ATS), and exempt reporting advisor.
The first tokenized asset will be for a real estate investment by Mancipi Partners, a real estate investment trust. Securitize will power the issuance of the securities as well as the onboarding and cap table management while being observed by the CNMV.
The shares will be tokenized on the Avalanche blockchain.
There is an expectation for secondary trading of digital assets to begin in September.
Once Securitize completes the approximately six-month sandbox period and regulatory approvals of the EU Pilot Regime, the company says it expects to receive licenses to issue, manage, and trade tokenized securities throughout the EU.
Securitize has long advocated that blockchain technology creates efficiencies that can be gained by both issuers as well as investors. Securitize touts greater transparency, streamlined compliance as well as a lower-cost process. Tokenization can also provide an entry point for asset classes previously difficult to access – especially for retail investors.
Secrutize said that this is an excellent opportunity for SMEs and REITs or Socimis – Spanish Real Estate Investment Trusts.
Securitize co-founder and CEO Carlos Domingo, a native Spaniard, said that investing in private markets or alternative assets is one of the most powerful ways of wealth creation. At the same time, private securities have been inaccessible to most individuals.
Securitize is now the first firm to be able to issue and trade tokenized securities in both the U.S. and Europe, and is the first firm to do so under the EU’s new pilot regime for digital assets,” said Domingo. “European businesses will be a major beneficiary of this innovation, giving businesses a new way to raise capital through primary capital raises, and obtain potential tax benefits and liquidity through secondary trading.”
CI reached out to Securitize with some additional questions. Amparo Garcia Flores, CEO of Securitize Europe Brokerage & Markets, clarified that Securitize is not approved under ECSPR or European Crowdfunding Service Provider Regulation – the new pan-Europeean securities crowdfunding regime. He said that the EU Pilot regime means Securitize is not restricted to the crowdfunding business and rules.
“This is intended to increase the ability to raise capital because we will now have the potential to issue both in the EU and USA under the different licenses,” said Flores.
Asked why Spain was the chosen jurisdiction as opposed to other EU member states, Flores said they chose Spain for several reasons.
“First off, Securitize CEO Carlos Domingo is Spanish so there is a natural link to the country. Spain is also a relevant place in terms of capital markets, being the fourth largest in the EU. Lastly, and maybe most importantly, Securitize has a regulatory sandbox with the CNMV in Spain, so there was an opportunity to start adapting our operations to the EU prior to having the regulatory environment completed. This will make the licensing process more practical, with the supervisor being able to check our operations adapted in real-time ahead of the licensing.”
As the UK is no longer part of the EU – yet it remains a large European market, Flores shared they expect UK issuers to utilize their services to access the EU market.
Flores said they are starting with real estate because it is a “brick and mortar business,” and this reinforces the fact this is not just about crypto-oriented firms but all kinds of issuers. He added that for the time being, equity, debt, and UCITs are the products the Pilot Regime authorizes.
We asked Flores his opinion on the US and what the country needs to do to push digital securities forward.
“The EU has been very proactive in creating regulation for digital securities, which are innovative in many ways, instead of purely making digital securities fit into the traditional regulation,” stated Flores. “That, of course, means a longer path in the short term, but we believe it will be a wider path in the long run because all aspects of DLT infrastructures have been taken into consideration since inception. Is the EU on the right path with MiCA? There is always room for improvement and we are always looking forward to having a regulation fast, but the path seems to be the right one.”
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