FinClear, one of Australia’s largest listed securities settlement firms, today launched a blockchain-based platform for tokenized unlisted securities FCX. It uses Digital Asset’s Daml smart contract language, the same one used in the stalled ASX replacement CHESS.
One of the largest four banks in Australia provides the ability to automate the movement of money between a bank account and cash tokens in an FCX wallet. The tokenized cash is then used to instantly and atomically settle the purchase of shares. We do not know which bank is associated with FCX, but earlier this year ANZ was involved in the stablecoin project.
Taking a step back, FCX allows private firms to use the platform to issue new tokenized shares to investors. Based on a distributed ledger, a company can manage the entire process, including information about proposals, documents and settlements, providing authorized access to potential investors. Once an investor pays for a share, it instantly appears in their FCX wallet. The issuer can follow the entire process.
The solution allows companies to easily manage the list of investors, the capitalization table. And the FCX plans to allow private equity secondary trading next year.
“The FCX platform combines technological and regulatory expertise and rigor for the secure tokenization of securities, which is completely different from cryptocurrency,” said David Ferrall, founder and CEO of FinClear. “We apply our extensive experience in highly regulated listed markets to give unlisted companies and investors the security they deserve.”
Three companies currently use the platform, including FinClear itself, givvable, and Circle In.
While blockchain is often seen as a means to democratize finance, as in many other jurisdictions, Australia restricts access to private company offerings to “sophisticated” investors, the equivalent of accredited investors.
Some see unlisted securities as easy fruit for distributed ledger applications. This is due to efficiency in public markets and the growing number of unicorns remaining private. In the United States, DTC is promoting its Project Whitney with plans to launch a private equity and digital asset solution, the Digital Securities Management (DSM) Platform, subject to SEC approval.
Some of the more institutional offerings include Switzerland’s daura, which has partnered with SIX Digital Exchange, Singapore’s ADDX, and France’s LiquidShare, which also uses Daml. There are several public blockchain security platforms such as iStox, Securitize and Tokeny.