The security token industry continues to grow and evolve every single day. New developments in this space pave the way for a brighter future. Curzio research’s CEO tokens are now accessible on MERJ, which is a pretty big leap for the industry.
The Curzio Research STO Plan
In 2019, Curzio Research – a client of the Security Token Advisors group – conducted a financing round by using its company shares. A total of $4 million in shares were sold to investors at the same. These shares were turned into Security Token offering tokens under the “CEO” banner. With the help of MERJ Exchange, based in the Seychelles, those tokens are now accessible to a global audience.
This is a significant deal, as Curzio Research is the world’s first company – as a private US-based firm – to list security tokens on a foreign public exchange. For the STO industry, it is a monumental turn of events. It paves the way for other US companies to tokenize company shares and list them on foreign exchanges as STO tokens.
The tokenization of Curzio Research shares is possible with the help of Securitize. The token issuance and lifecycle management platform helped complete the issuance and private placement offering to accredited investors. Existing Curzio Research clients are the main investors in these CEO tokens.
Initially, the tokens were “locked up” for 12 months. Securitize removes the restrictions after receiving an opinion letter. Due to the removal of restrictions, CEO tokens are now accessible on the MERJ Exchange. Anyone in the world can opt to invest in this token.
Navigating the Regulatory Waters
It is not easy for American private companies to raise capital in the US. Curzio Research has to go through several hoops to make that vision a reality. Advertising the private offering publicly requires the use of private exemptions. Those were granted, allowing the firm to attract investments from accredited US investors.
For foreign investments, things work a bit differently, Companies require a Regulation S exemption. Combined with the Regulation D, 506(c) exception, the lock-up periods for CEO tokens were established at 12 months. Restricting transfer of ownership for securities is crucial to obtain exemptions. It is also beneficial to the appeal of the CEO tokens, as it safeguards investors’ contributions.
While Curzio Research works closely with Securitize, there is another cog in the machine. With the help of Digital Securities Law Group, legal counsel could be achieved. Having a background in securities law will likely become a highly sought-after trait for anyone interested in working in the STO industry.
Finding Secondary Markets
Even if all the above is taken care of, the battle is only half won. Listing an STO token on secondary markets is not straightforward either. In the United States, few secondary markets exist. More specifically, few markets exist that are registered with the domestic securities regulator. Most of the accessible markets are broker-dealers. There is a lot of room for competition in this space.
One may argue that public exchange can be a good fit for security tokens. Filing a listing application for NASDAQ will not have much success, however. There is no approved process or infrastructure to list STO tokens on such platforms. Additionally, the listing fee itself will often be quite steep. Keep in mind Curzio Research only raised $4 million.
Eventually, the team came across MERJ Exchange. As a national securities market in the Seychelles, the company is a dynamic exchange operator. It is also a fast-growing platform, as global interest in security tokens keeps accelerating. Prior to Curzio Research listing its token, MERJ had already attracted $1.7 billion in market listings. Catering to issuers of security tokens on a global level gives the company a competitive edge and appeal.
It is safe to say the listing of CEO tokens on MERJ Exchange opens a lot of doors. For the first time, tokenized private securities in the world hit a public exchange open to US investors. More importantly, this offer extends beyond accredited investors only. Anyone in the world can partake in Curzio Research’s tokens starting today.
Additionally, the company has shown there is an affordable option to achieve this goal. Avoiding expenses is impossible, but the overall cost is much lower than an IPO or public US listing. With this example in the books, the security token market is ready to enter the next stage of adoption.