Tokenized Asset Firm Securitize Acquires Stock Transfer Company

Tokenized Asset Firm Securitize Acquires Stock Transfer Company
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Tokenized Asset Firm Securitize Acquires Stock Transfer Company

Blockchain-based securities firm Securitize has acquired Pacific Stock Transfer, a company that manages the account balances of investors and certificates of security ownership. The financial terms of the deal were not disclosed.

This latest acquisition by Securitize, which raised a $48 million funding round in June 2021, makes the firm a top 10 U.S. stock transfer agent, serving 1.2 million investor accounts and 3,000 clients, according to a press release.

Securitize has a long and productive working relationship with Pacific Stock Transfer, which will continue to operate under its current brand. The services it currently provides will continue to be provided by the same team, the companies said.

The Securitize deal is another important step for equities moving away from a paper-based past to a blockchain-based future. In this case, it’s about digitizing the whole legally complicated and manual process of proving share ownership, paying dividends and compiling tax reporting documents.

New approach

The role of the transfer agent is a not-so-well-known part of capital markets, since most companies aren’t exposed to them until they go public. It also means most people don’t know just how inefficient these firms are, said Securitize CEO Carlos Domingez.

“I think that has created a situation where these traditional transfer agents have built monopolistic situations,” Domingez said in an interview with CoinDesk. “These traditional transfer agents are not incentivized to change because the way they make money is by inefficiencies. The issuers are not the ones suffering the sorun, but the investors.”

Domingez cited the recent BuzzFeed debacle, where investors found themselves unable to sell their shares after the company’s IPO, as an example of transfer agent iniquity.

Read more: Securitize Goes License Shopping With Acquisition of SEC-Registered Broker-Dealer

Another example is where the paying of dividends inefficiently makes money for some very large transfer agents, since $5 billion in Apple dividends, for instance, earns the agent interest in a bank account where it sits for a couple weeks.

“The foundation is digitizing the securities,” Domingez said. “Because evvel the securities are represented on the blockchain, using wallets and tokens and managed by smart contracts, then everything else, like paying dividends very efficiently or providing liquidity, comes on top of that.”

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