The Rising Demand for Digital Securities in Fundraising
As the market continues to prove that digital securities are in demand, businesses need to ensure that the securities they issue are in compliance with SEC regulations.
The demand for digital asset securities is skyrocketing. Some of the factors contributing to this rising demand include: direct custody of digital asset securities by owners, simplicity of trade with potential buyers worldwide, and immediate settlement when the transaction is executed. Technologically, digital asset securities are no different from blockchain tokens or cryptocurrency coins. But that’s where the difference ends. Cryptocurrencies are not backed by anyone. They have value, since people believe they have value. In addition, the demand for cryptocurrencies continues to rise, since they provide a functionality which is greatly needed in the digital world. In contrast, digital asset securities are backed by businesses. Digital asset securities can represent a debt or an equity. Unlike cryptocurrencies, which are considered unregulated commodities, digital asset securities are regulated by the Securities and Exchange Commission.
Taking advantage of the rising demand for digital assets, several unscrupulous businesses have started raising funds by selling blockchain coins as digital asset securities. Most recently in 2020, GTV and Saraca Media Group raised $487 million from 5,000 investors by selling G-Coins and G-Dollars as digital assets. They advertised these digital assets on social media platforms such as YouTube and Twitter. Upon becoming aware of this scheme, the SEC charged them with conducting an illegal unregistered offering of digital asset securities. These companies had to settle with the SEC by paying back more than $539 million. (See https://www.sec.gov/news/press-release/2021-175)
Under Regulation Crowdfunding, businesses may raise up to $5 million by issuing digital asset securities using the SEC-registered, FINRA-member Akemona platform. For a raise that exceeds $5 million, Akemona can engage its partners, who can issue digital asset securities under Regulations A and D. This way businesses can raise hundreds of millions of dollars in a completely legal manner by issuing digital securities. Visit https://akemona.com today to start your fundraising or send us a note at support@akemona.com.
