16.05.2021

German Security Token Platform to Develop a Custody Solution

According to an announcement shared with Cointelegraph on May 4, the cooperation aims to develop a regulated security token custody solution explicitly aimed at institutional investors, high net worth individuals and corporations. Black Manta and Finoa will first collaborate on securing the tokens of the Berlin STO that has tokenized $12 million worth of real estate announced last month.

German security token offering (STO) platform Black Manta Capital Partners partnered with local digital asset custody firm Finoa to develop institutional security token custody.

Per the announcement, Finoa is a Berlin-based digital asset custodian that holds a crypto custody license issued by the German Federal Financial Supervisory Authority (BaFin). Black Manta co-founder and managing partner Christian Platzer commented:

“Germany’s crypto custody legislation triggered a wide range of service providers in the digital assets space to apply for a BaFin licence. The German legislation was a crucial step to bring the confidence and liquidity of professional players to the space. In Finoa we see a team that is not only well positioned to cater to the high end investor class, but who bring also a mindset to the table that will be needed to develop this rapidly emerging market.”

Black Manta Capital Partners had not answered Cointelegraph’s inquiry as of press time. This article will be updated should a response come in.

The rise of security tokens

Previously, Platzer told Cointelegraph that, compared to traditional alternatives, STOs feature “lower transaction costs, transferability, tradability. You can invest in real estate today, without going to a notary.” Black Manta obtained a license for its STO platform from BaFin in the summer of 2019. According to Platzer, to launch its recent real estate STO the firm only had to answer a few questions from the regulator.

Given their promise, STOs are seen as a major part of the future of investing by many. Still, such offerings continue to reside in a legal grey area in much of the world. In an attempt to ease the issue France’s market regulator recently started considering a regulatory sandbox meant to study the impact of security tokens in the European Union.

Global Crypto Framework Needed to Stop ‘Regulatory Arbitrage,’ Watchdog Warns

Hong Kong’s chief securities regulator says world regulators needs a united response to Facebook’s Libra to tackle the “real risk of regulatory arbitrage.”

In remarks delivered Wednesday at Hong Kong Fintech week, Ashley Alder, chief executive officer of the Hong Kong Securities and Futures Commission (SFC), said Libra and other “Big Tech” stablecoin projects pose a deep threat to fragmented financial regulators around the world.

The risk comes not when countries shore up their domestic anti-money laundering and consumer protection laws, but when some do, and others don’t, Alder said.

Explaining the “arbitrage” threat – that is, when companies flee stricter jurisdictions for nations with more lax regulations – Alder said:

“If a retail stablecoin is approved in one jurisdiction, whether as a security, payment system, fund, trading platform or another category (or a combination of these), it could easily go global very quickly if it rides on the back of the huge user-base of a Big Tech platform.”

Alder acknowledged that Libra’s explosion into the public consciousness has brought added scrutiny around the area. Indeed, recent pressure from Chinese, U.S. and EU regulators has triggered a hemorrhage among the project’s governing council, with several companies exiting the project even before the namesake Libra Association was formally created.

Regardless of how Libra itself performs or if it launches, Alder said, its very existence has drawn much regulatory attention to the crypto space.

“In 2018, the crypto world was seen to be of marginal importance to the global financial system. The Financial Stability Board, which is basically the G20’s financial regulatory arm, concluded last year that, although blockchain ‘currencies’ such as Bitcoin were problematic from an investor protection angle, they did not yet pose any significant financial stability risks”, he said. “But then came Facebook’s Libra, and the international regulatory community had to get its act together very rapidly.”

“But, regardless of its future prospects, the Libra project has galvanized regulators across the world to look far harder at the opportunities and risks inherent in virtual assets.”

Alder’s remarks at the Fintech conference also presaged the release of SFC’s updated regulatory framework for crypto exchanges.

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