Security token frameworks offer vast improvements for how assets can be traded seamlessly around the world. With blockchain at its core, the potential for innovation in this area is endless as a global community of developers works on STO technology. Compliant securities issued on a blockchain will push us forward into a future where global liquidity can reach previously unexplored markets.
Several security token issuance platforms are competing for the spotlight to become the premier protocol for STOs. These platforms integrate KYC, anti-money laundering, investor management and securities legal compliance to automate the primary issuance and secondary market transferability of any tokenized asset across all borders.
Influential Capital has put together a comparison of the most notable security token issuance platforms so our clients and others participating in the industry can make informed decisions on which platforms are most suitable.
Team Size: 19
Location: Washington D.C., Abu Dhabi
This all-in-one inclusive platform is desirable for those seeking a one-stop security token issuance service, automated post-issuance token support, and fully-interoperable token protocol for exchanges. Icowatchlist goes to describe Securrency as part currency, part exchange, part bond, and part exchange-traded fund share.1 Securrency has created the CAT-20 and CAT-721 token standards. These tokens are able to be transferred across any large blockchain network or legacy venue while retaining their built-in compliance characteristics. CAT protocol cross-chain capabilities extend to networks such as Stellar, EOS, and Ethereum.2 In addition, Securrency has built core industry infrastructure to support the secondary market trading of security tokens across platforms worldwide. The issuance and post-issuance support platforms come with different pricing packages. Securrency’s leadership team include a number of military veterans.
- Founded in 2015, the company is the longest standing security token infrastructure platform.
- Tokens are compatible with virtually any blockchain network and provide an advantage over competitors that only offer Ethereum compatibility.
- RegTex™️ compliance engine called provides fully-automated onboarding and issuance capabilities.
- Native customer management applications are embedded into the Securrency platform, which allow issuers to manage their investors without the use of external applications.
- Key partnerships include SharesPost, AX Trading, Entoro, Vertalo, OpenFinance and SeriesOne.
- Patent-pending CAT-20 and CAT-721 protocols powered by a proprietary centralized Rules Engine.
- Pricing structure is not transparent.
- SaaS-model pricing for enrollment and initial tokenization
- Annual maintenance fees charged on issued tokens
- Optional charge for project-based, customized solutions built upon core technology
Bottom Line: Securrency has more technology built-in than its competitors, has wider capabilities such as cross-blockchain support, and a team comprised of cryptography experts.
Company Info: Securitize
Team Size: 25
Location: San Francisco, Tel Aviv
Securitize has created industry-standard compliance features for issuing security tokens. The company is the creator of the DS Protocol, which enables “DS tokens” to operate on top of the ERC-20 token standard. The DS Protocol provides for 1) user authorization through a trust service for exchanges, applications, and other clientele, 2) a registry that holds investor information including KYC details, 3) a compliance layer that integrates the securities laws and regulations of selected jurisdictions, and 4) a communication service that notifies investors of industry relevant information pertaining to issued security tokens.
- Securitize is well-funded, having raised a $12.75 million Series led by Blockchain Capital, Coinbase Ventures, Xpring (Ripple), NXTP and Global Brain Corporation.4
- Highest early adoption rate in the market.6
- One of the first issuance platforms to list high quality security tokens, already issuing over 4 billion tokens from Blockchain Capital, SpiceVC, Augmate, 22x Fund and Science Blockchain.
- Straightforward onboarding process within a contact form.
- Securitize covers equity, real estate, and funds via their platform with plans to add debt.
- Key partnerships include Tzero, Blocktrade, OpenFinance, Airswap, SharesPost, Hyprion and Bnk to the Future.
- DS Tokens are for use primarily within the Ethereum network. No mention of cross-blockchain support to other networks such as Stellar, EOS, etc.
- Pricing structure is not transparent.
Upfront fee + monthly recurring fee. The initial contracts are 2-year deals.B
Bottom Line: Securitize comes with strong industry partnerships and funding. While the protocol doesn’t currently offer cross-blockchain support, it benefits from an experienced team and an edge over its competitors through an early mover advantage.
Company Info: TokenSoft
Team Size: 15
Location: San Francisco and New York
TokenSoft leads the market in providing a technology solution to support compliant securities offerings for blockchain-based issuances of security tokens and tokenized securities alike. The company also provides a structure designed to support future issuances and partnerships. TokenSoft clients are leading digital asset issuers, including Andra Capital, Hedera Hashgraph and the Tezos Foundation. To date, clients have raised more than $400 million through the platform.
The platform’s white-label, end-to-end infrastructure includes:
- Issuer branded onboarding platform that enables global participation, including tailored compliance flows for 50+ jurisdictions for KYC/AML and investor accreditation
- Post-issuance compliance support for distributions, dividends and trading through open- architecture token issuance and design
- Digital asset custody solutions and partnerships
TokenSoft engineers also developed the ERC-1404 standard, an open standard that allows issuers to control investor limits, manage investor whitelists, and implement compliance requirements globally. ERC-1404 also can be used to implement with other standards like Polymath’s ST-20 or Harbor’s R-Token.
- Scale: 28,000 individuals processed in a single deal; 20+ clients simultaneously
- Experience: 20 years of combined experience in blockchain technology
- Results: $400 million+ raised by our clients
- International Scope: Managed tailored compliance flows for 50+ jurisdictions
- Growing Services: Recent acquisition of an interest in a broker-dealer; custody solutions including Knox Wallet and access to Coinbase Custody
- Customizable Solutions: Bespoke, customizable issuance to meet specific needs of issuer and their counsel
- Profitable and Strong Investors: TokenSoft is profitable and has the backing of a dozen investors, including eVentures, Base10, Coinbase Ventures and Fidelity Ventures.
- Key partnerships include OpenFinance Network, Stellar, Hyperledger, R3 Corda, and Tierion.
- Does not support ICOs
- Selective in accepting clients, including legal counsel chosen
- SaaS-model pricing for token issuance
- Ongoing monthly fee for post sale management
- Additional fees (optional) for custody solutions
Bottom Line:TokenSoft was founded by engineers and has more technology and cybersecurity built into its processes than other firms. TokenSoft supports issuers in adhering to compliance regulations, domestically and globally with the main goal of allowing issuers to leverage a new means of business growth through digital asset issuance.
Company Info: Polymath
Team Size: 43
Location: Toronto, Canada
Polymath is a decentralized issuance platform with four layers: Marketplace, Polymath Token Studio, ST-20 Protocol, and the Ethereum Network.7 In the Marketplace, developers can offer modules and STO smart contracts for off the shelf use by issuers.7 Next, the Polymath Token Studio allows issuers to create customized tokens and launch their own STO.7 These capabilities encompass everything from reserving a ticker symbol to selecting KYC/AML providers. The Polymath core smart contracts provide a system for deploying security tokens with built-in transfer restrictions on a decentralized blockchain. This allows for the formation of ST-20 compatible tokens that include the implementation of the desired legal requirements to satisfy the issuance process7 Polymath’s proprietary ST-20 Protocol is run through the Ethereum network and serves as the platform’s architectural foundation.
- The company is well-funded, having raised $59 million through a token sale in 2018.
- Polymath has a strong brand presence, high profile advisors, and a transparent pricing structure.
- Team consists of accomplished blockchain developers.
- Open platform allows issuers to select their own KYC/AML provider and other partners.
- In no specific order, industry partnerships include, SelfKey, IdentityMind, Open Finance Network, Pegasus Fintech, Vertalo, Blocktrade, Prime Trust, Monarch Wallet, Netcoins, GenesisBlock, Tokenizo, Aird & Berlis, Cassels Brock, Homeier Law PC, Messner Reeves LLP, Security Token Lawyers, Glyph, Wachsman PR, and BitGo.
- Companies using Polymath for token creation include, Corl, 7PASS, MintHealth, IPwe, and BlockEstate.
- Uses an ERC-20 utility token for payments (POLY).
- Does not have cross-blockchain support, and functions primarily on the Ethereum network.
- No examples of proven secondary market liquidity for Polymath tokens.
250 POLY for Ticker Registration + 250 POLY for Token Creation + 20,000–100,000 POLY for audited STO Smart Contract = 20,500 POLY total 8
Bottom Line: Polymath makes it easy for business to create their own security tokens and comes with a large partner network. In addition to issuance technology, Polymath connects issuers to third party advisors that they may need for their offering, such as lawyers, broker-dealers, custody providers, etc.
Company Info: Harbor
Team Size: 30
Location: San Francisco
Harbor’s issuance platform streamlines investor onboarding, including KYC/AML, accreditation, tax forms, document signing, funding, wallet provisioning and custody through integration with BitGo. The Harbor compliance protocol enforces the complex rules and regulations governing securities on issuance and secondary transfers. Harbor’s R-Token, an ERC-20 token standard with additional capabilities, ensures that any supported ERC-20 wallet or exchange will be compatible with all necessary compliance requirements in secondary security token trading. The compliance protocol supports investor eligibility, total investor base, holding periods and more.
- Harbor is well-funded, having raised $38 million from Founders Fund, Pantera Capital and more.
- Clean front-end design and intuitive user experience.
- Primary focus on the real estate market.
- Oracle feature acts as a compliance arbitrator through both exchange and peer-to-peer token transfers.
- Harbor offers a team backed with strong experience. David Sacks previously created Yammer, Craft Ventures, Zenefits and was the COO of Paypal.”9
- Harbor’s token transfer architecture is partially centralized. If Harbor were to stop operating, the issued tokens may no longer have the same support as when the company was operational.
- Harbor is currently built around Ethereum, though it could support other blockchains in the future.
- Pricing structure is not transparent.
Depends on the size of the project — custom quoting
Bottom Line: Harbor is a simple and intuitive issuance platform, especially suitable for real estate security token offerings. The company also has an impressive prior track record and investors. However, Harbor’s compliance protocol is centralized.
Company Info: Abacus
Team Size: 13
Location: San Francisco
Abacus Protocol is a newcomer in the security token issuance platform market, recently coming into the spotlight through a partnership with OpenFinance. Abacus has created the S-Token Protocol, which is comprised of five components: Protocols, Token Instruments, Providers, End Users, and Marketplaces. 10 The main focus of this platform is to provide a foundation for the creation of autonomous services for tokenized financial instruments.11 Abacus has compatibility with existing token standards, such as ERC-20, ERC-721, R-Token, ST-20 and more.10 Abacus Identity is an additional offering which allows project support for identity verification services.12
- Free to use.
- Recent partnership with OpenFinance provides secondary trading support upon security token issuance.
- Partnerships with 0x, Dharma, Set and WalletConnect places an emphasis on decentralized platforms.
- Compatibility with existing industry token standards such as ERC-20, ERC-721, R-Token, ST-20, etc.10
- Recently launched service Abacus Identify currently includes workflows for photo IDs, AML checks, investor accreditation, FATCA forms, and social media, which should be sufficient for any KYC/AML program.12
- No clear platform timelines, very early in development versus its competitors.
- Pricing is still being determined.
Abacus is free, however fees will be charge for services incurred outside the core blockchain.
Bottom Line: Abacus is early in its development, but its freemium pricing model may make it a security token industry powerhouse in the future.
- Darko E. The Best STO Issuance Platforms You Should Consider. ICO Watch List. https://icowatchlist.com/blog/best-sto-issuance-platforms/. Published 2018. Accessed November 27, 2018.
- Securrency Blockchain Security Token Protocol’s Compliance Aware Token (CAT-20 and CAT-721) Releases. BitcoinExchangeGuide. https://bitcoinexchangeguide.com/securrency-blockchain-security-token-protocols-compliance-aware-token-cat-20-and-cat-721-releases/. Published 2018. Accessed November 27, 2018.
- Sandberg N. Securrency Introduces CAT-20 and CAT-721, the World’s First Multi-Ledger Security Token Protocols. Businesswire.com. https://www.businesswire.com/news/home/20181005005081/en/Securrency-Introduces-CAT-20-CAT-721-World%E2%80%99s-Multi-Ledger-Security. Published 2018. Accessed November 27, 2018.
- Esteves R. Coinbase, Ripple, Blockchain Capital Invest $12.75m in Security Token Issuance Platform. NewsBTC.com. https://www.newsbtc.com/2018/11/27/blockchain-capital-coinbase-invest-12-75-million-in-security-token-issuance-platform/. Published 2018. Accessed November 29, 2018.
- Securitize raises US$12.75M to digitize legacy securities with blockchain technology. Securitize.io. https://www.securitize.io/press/securitize-raises-us-12-75m-to-digitize-legacy-securities-with-blockchain-technology. Published 2018. Accessed November 27, 2018.
- Home. Securitize | Home Page. https://www.securitize.io/#why-tokenize. Published 2018. Accessed November 27, 2018.
- St.Louis C. Understanding the Layers of the Polymath Network — PolymathNetwork. PolymathNetwork. https://blog.polymath.network/understanding-the-layers-of-the-polymath-network-b81c67e49572. Published 2018. Accessed December 19, 2018.
- Polymath Guide for Issuers, Including Fee Schedule — PolymathNetwork. PolymathNetwork. https://blog.polymath.network/polymath-guide-for-issuers-bbdad81bec7c. Published 2018. Accessed November 30, 2018.
- Harbor vs Polymath — which securities protocol is better?. Tokentalk.co. https://www.tokentalk.co/TokenTalk/harbor-vs-polymath-which-securities-protocol-is-better-5ae0a0cc9931793944ab15b2. Published 2018. Accessed November 27, 2018.
- Abacus Protocol Specification v0.9. Abacus Protocol. 2018;(V0.9):4–6. https://github.com/abacusprotocol/whitepaper/blob/master/whitepaper.pdf. Accessed November 27, 2018.
- Vig P. Introducing the Abacus Protocol: Paving the way for the total automation of financial instruments. Medium.com. https://medium.com/abacusprotocol/introducing-abacus-paving-the-way-for-the-total-automation-of-financial-instruments-d7eae3792f0d. Published 2018. Accessed November 27, 2018
- Vig P. Introducing Abacus Identity: An identity verification solution for blockchain finance. Medium.com. https://medium.com/abacusproatocol/introducing-abacus-identity-an-identity-verification-solution-for-blockchain-finance-c9f1061b0b06. Published 2018. Accessed November 27, 2018.
- Chaparro F, Zheng S. Nasdaq is looking at gatecrashing a red-hot industry with a platform to issue tokenized securities. theblockcrypto.com/. https://www.theblockcrypto.com/2018/10/12/nasdaq-is-looking-at-gatecrashing-a-red-hot-industry-with-a-platform-to-issue-tokenized-securities/. Published 2018. Accessed November 27, 2018.
- CryptoDigestNews. (2018). Guide To Launch Your Own Security Token — CryptoDigest. [online] Available at: https://cryptodigestnews.com/guide-to-launch-your-own-security-token-9b5ae09030ee [Accessed 27 Nov. 2018].
- Desai M. Security Tokens — The Players. Medium. https://medium.com/@mondesai/security-tokens-the-players-efb936ae84df. Published 2018. Accessed November 27, 2018.
- Amano A. Security Tokens — The Players. Medium.com. https://medium.com/@mondesai/security-tokens-the-players-efb936ae84df. Published 2018. Accessed November 27, 2018.
Jaron is the CEO of Influential Capital. Previously he founded Coinsetter, one of the first digital asset exchanges launched in 2012, and acquired Cavirtex, a leading exchange in Canada—both acquired by Kraken in 2016. Before entrepreneurial life, Jaron was in private equity and investment banking.