The US SEC and NFTs; Polymath’s incentivized testnet; StarkWare’s $75million Series B

Week of March 28th, 2021

Hi everyone, and welcome to the latest installment in our weekly industry newsletter!

This week, we’re covering the US SEC’s latest comments on fractionalized NFTs, Polymath’s Incentivized Testnet, and Azimut’s AZIM token, among other highlights!

Join us for the latest…

1. SEC’s Hester Peirce warns against fractionalized NFTs, amidst an unclear regulatory environment

SEC commissioner Hester Peirce gave a stark warning to issuers this week, saying that fractionalized NFTs could cause them to be labelled as securities. At the Security Token Summit, an event that hosts industry players giving their thoughts on the latest developments and future roadmap of the security token industry, Peirce said that “‘you better be careful that you’re not creating something that’s an investment product, that’s a security’”.

This comes amidst other comments by Pierce criticizing the Howey Test, which is used to test whether an asset is a security; Pierce alleges that the Howey Test’s logic does not translate well to digital assets as opposed to physical assets. (Markets Insider)

1. SBI Holdings to offer OTC services for trading security tokens

Japan’s SBI Holdings, this week, announced that it can now offer its retail customers “over-the-counter transactions for the secondary trading of tokens that it has issued”.

This comes after changes to its registration to be compliant with Japan’s regulatory environment. On the horizon, SBI has planned a “blockchain-powered digital securities exchange in association with SMBC”. (Ledger Insights)

2. Polymath’s Incentivized Testnet

Security token technology provider, Polymath, has revealed the latest development for Polymesh, its blockchain for regulated assets. Polymath’s Incentivized Testnet will “[allow] users and node operators to test the full technical capabilities of the chain, while giving them the opportunity to accrue points for taking specific actions and compete with others for spots on the leaderboard”.

By inviting users to compete for rewards by completing tasks, the incentivized testnet will contribute to the Polymesh blockchain’s security before it goes live. (The Tokenizer)

1. Scaling and security solutions company, StarkWare, raises $75million in Series B round

StarkWare, a scaling and security solutions company for the Ethereum blockchain, has just closed a $75million series B funding round.

Based in Israel, StarkWare Industries aims to be the “infrastructure backbone across decentralized finance, non-fungible tokens, and security” across the Ethereum blockchain. The scaling value proposition here is very welcomed, as Ethereum has been plagued by ever-growing trading fees. (The Block)

2. Azimut’s AZIM Token

Italian asset manager Azimut has just launched AZIM (Azimut Token), which has the distinction of being “the first token for investing in the real economy”. This news comes from a collaboration with Sygnum Bank, itself a pioneer, being that it is the first digital asset bank in the world.

AZIM represents Azimut’s SME loan portfolio of 5million EUR. (Born2Invest)


Regulatory News

1. “The SEC’s ‘Crypto Mom’ Hester Peirce says selling fractionalized NFTs could be illegal”

Industry Updates

1. “SBI Securities updates legal registration. Readies for Security Token Offerings”

2. “Polymath Unveils Incentivized Testnet for Polymesh”

Investment and Financing

1. “StarkWare raises $75 million in Series B funding round led by Paradigm”

2. “The first token to invest in real economy was launched: the Azimut token”

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About RedBlock

RedBlock Inc is a digital investment and fintech firm leveraging blockchain technology for asset digitization and management, from issuance to secondary liquidity. Its global network of capital market participants, including issuers, broker-dealers, secondary exchanges, funds, liquidity providers and custodians, are supported by its end-to-end blockchain-powered asset management platform. RedBlock also manages an investment fund to support companies in its ecosystem that align with its investment thesis. With a growing track record and pipeline, the RedBlock team hails from top tier global investment banks, venture capital firms and blockchain technology companies.

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