This post is by Jeff Carter from Points and Figures
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One of our portfolio companies is Open Finance based in Chicago. They are trading security tokens on their ATS. They are the first U.S.-regulated digital security trading platform built for alternative assets. Trading on the platform is available to qualified US investors and verified non-US investors. They are the first platform to receive permission to trade these sorts of financial instruments.
Today they announced that they listed a new security token, Protos. Protos was the first tokenized hedge fund. It’s kind of cool that the first tokenized hedge fund is now listed for trading on the first security token platform. This is interesting because many hedge funds are “liquid”, meaning you can get your money out in a specified period of time like 30-90 days. Tokenizing them allows you to pull money out that day-and put money in that day as
. It also allows the market to value the underlying assets owned by the fund in a real-time basis provided there is enough liquidity in trading the token.
The tokenization of assets is an interesting thing. Yesterday, Union Square Ventures announced that they invested in Otis, a way to securitize all kinds of rare assets. A couple of years ago my friend Howard invested in Rally Road. It is the digitization of classic cars allowing anyone to own a share in a classic car. There is no doubt in my mind that REITs would function better and allow more capital to flow easier if they tokenized. Many works of art would be more valuable if they were digitized and tokens were sold. Individual commercial properties in prized locations might be more valuable if tokenized. The real estate market is inefficient because transactions happen only once in a while. Price transparency is a key differentiator of tokenization.
When we did the IPO at CME ($CME) and transformed the company and financial services industry, one of the key things we saw was a lot of untapped value locked up in our memberships. By turning the memberships into shares, we were able to unlock billions in value. The same can be done for a lot of assets because turning them into listed shares is unwieldy. Turning them into digitized tokens is a lot more efficient. By the way, that process started in 1997 and didn’t culminate until the end of 2002.
It’s going to be a process to get there. One day, the fog will lift.
(photo on Deeryard Lake this morning)