London-based 20|30 Ltd has become the first UK company to successfully complete the tokenisation and issuance of their equity as part of the UK Financial Conduct Authority’s (FCA) Sandbox 4.
This test happened in partnership with fintech company Nivaura, who acted as custodian for the offering. Nivaura recently raised £20 million in a seed funding round led by London Stock Exchange Group. Other investors in Nivaura include leading law firms Allen & Overy, Linklaters and Orrick.
Venture studio 20|30 is building a portfolio of innovative services and products using blockchain technology. The test issuance was executed by TokenFactory, a capital raising platform and the first of 20|30’s products to go to market.
London Stock Exchange Group participated in the test issuance by sending settlement instructions to a public blockchain via 2030’s platform which is powered by Nivaura technology. The test therefore demonstrated connectivity between a regulated trading venue, the Turquoise Plato™ platform, and a public blockchain infrastructure.
Tomer Sofinzon, Founder & CEO of 20|30, said:
“Clearing and settlement are vital processes that sustain trust and certainty in the global financial system. For tokenisation to be embraced it is vital that the issuance and trading of tokens be transacted with the same level of trust and legal certainty as shares and other securities.
“That is why we are delighted to announce that for the first time an equity token offering has harnessed blockchain to effect settlement in collaboration with a major stock exchange.
“We have succeeded in what we hope is the first step in reinventing capital markets. By tokenising our own equity at 20|30 through TokenFactory, we can demonstrate that there is a far better way to unlock the value of equity, built on innovative blockchain technology which will transform the way companies raise capital.
“Tokenisation will unlock value in a whole range of assets, from existing shares to new issuance, bonds, property, IP, fine art and much more.”
As a regulated, full-service fundraising machine, TokenFactory empowers investors with greater access to investment opportunities and to liquidity, while companies can raise capital more cheaply than traditional methods and in a time-efficient manner. TokenFactory will tokenise equity in a way that is compliant with UK laws and regulations. This is one of the few models of tokenisation that can be scaled with ease, and differs from digitised uncertificated shares, an approach adopted by a number of other companies that does not necessarily provide the same legal certainty.
The test issuance was executed within the FCA’s Sandbox Cohort 4. Upon the closing of this issuance and initial funding round in late March, TokenFactory will aim to remove its Sandbox restrictions to be a fully authorised MiFID investment firm able to arrange the issuance of equity tokens by global firms launching issuances in the UK. Until then, professional investors wishing to participate in the firm’s fund raise can continue to do so.
Robert Barnes, Global Head of Primary Markets and CEO Turquoise, LSEG, said:
“London Stock Exchange and Turquoise Plato are delighted to have participated in the FCA’s Sandbox 4 in partnership with Nivaura. London Stock Exchange Group is committed to exploring technology innovations that can help drive further efficiency and growth across the capital markets lifecycle.”