Neufund is announcing a partnership with the Malta Stock Exchange and Binance, one of the biggest cryptocurrency exchanges globally, and a pilot project. The final goal is to create a regulated and decentralized, global stock exchange for listing and trading tokenized securities alongside crypto-assets.
While this may sound like just yet another appropriation of blockchain technology for mainstream finance, it’s much more significant.
Cryptocurrencies are increasingly regulated in most of the world. Initial Coin Offerings (ICOs) and token sales, which can allow innovative companies to crowdfund their way to success, are increasingly frowned upon. The reason is easy to understand: ICOs are really unregulated Initial Public Offerings (IPOs) of equity, equivalent to shares, and according to the authorities ICOs should be subject to the same strict regulations used for securities.
But the restrictive regulations in place almost everywhere create an incentive for forward-looking countries to introduce much more permissive regulations to attract innovative startups, capital and talent. Malta wants to be one of these blockchain innovation hubs, and therefore Neufund recently established a presence in the island. Now, the plan is beginning to unfold.
“We are delighted to welcome Neufund as our key partner in building a Blockchain-based exchange that is fully integrated with established financial markets,” said Joseph Portell, Chairman of the Malta Stock Exchange. “With the upcoming pilot project we become a worldwide pioneer in digital finance.”
In many jurisdictions, small investors are not allowed to invest in promising pre-IPO shares, only open to wealthy “accredited investors.” This deprives both startups and small investors of promising win-win opportunities.
But now, thanks to technical innovations by Neufund and regulatory innovations by the Malta government, small investors will be able to become shareholders in companies via Equity Token Offerings (ETOs) able to decentralize and democratize the stock market.
Neufund’s fundraising platform is based on smart contracts operating on the Ethereum blockchain. Neufund integrates blockchain-based solutions into the existing legal framework, opening ETOs for all companies and investors. Using this legal and technical infrastructure, startups and established companies alike can legally issue tokenized equity that can be purchased with cryptocurrencies.
“We are thrilled to announce the partnerships with Malta Stock Exchange and Binance, that will ensure high liquidity to equity tokens issued on Neufund. It is the first time in history, that security tokens can be offered and traded in a legally binding way,” said Zoe Adamovicz, CEO and Co-founder at Neufund. “The upcoming pilot project will allow us to test the market’s reaction and realize the overall project idea in an environment with minimized risk.”
“We are glad to partner with Neufund over the pioneering idea to create a complete ecosystem for issuing and trading securities on Blockchain,” added Chanpeng Zhao, CEO of Binance. “Today’s announcement marks a new chapter for Binance’s development, with the goal to tokenize traditional financial assets.”
TechCrunch notes that this move is interesting because it offers a parallel track to companies wishing to go public via token sales, and Malta is becoming a testbed for these sorts of experiments, which could create a turnkey solution for ICOs.
Some companies have decided to conduct an ETO with Neufund. The most recent company to jump on the ETO bandwagon is Founders Bank. “I am excited about the upcoming equity token offering when everyone will be able to become the co-owner of the company and shape the future of banking with us,” said Michael Bianchi, Chairman and Co-founder at Founders Bank.
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