Sebastian Sinclair

<div id="highlights-block_628c65de41e10" class="highlights">
 <ul>
 <li>A subsidiary of the Stock Exchange of Thailand as well as global investment manager Hamilton Lane have been onboarded as shareholders following the deal</li>
 <li>United Overseas Bank and the corporate venture capital arm of Thailand&#8217;s fifth-largest bank Krungsri, were also onboarded</li>
 </ul>
 
</div>



Blockchain-based private market exchange ADDX said Tuesday it has raised tens of millions of dollars from some of Asia&#8217;s largest financial institutions in a bid to maintain its position as a top operator within the region.



The Singapore-regulated exchange said in a statement that it had raised $58 million in fresh funding via a pre-Series B funding round from the likes of the Stock Exchange of Thailand subsidiary SET Venture Holding and global investment manager, Hamilton Lane. Hamilton manages roughly $851 billion in assets, according to its <a href="https://www.hamiltonlane.com/" target="_blank" rel="noreferrer noopener">webpage</a>.



Those two, including United Overseas Bank and the corporate venture capital arm of Thailand&#8217;s fifth-largest bank Krungsri, were onboarded as new shareholders.



Founded in 2017, ADDX is a full-services capital markets platform regulated by the Monetary Authority of Singapore (MAS). The exchange seeks to leverage blockchain and smart contract technology for the tokenization and fractionalization of private market opportunities such as pre-IPO equity.



The latest addition of shareholders joins those already listed on the ADDX cap table including the Singapore Exchange, Temasek-owned Heliconia Capital and the Development Bank of Japan, among others.



&#8220;Our corporate clients will be able to tap new fund-raising channels, while our accredited investor clients will gain access to alternative investments in tokenised assets,&#8221; said UOB&#8217;s Head of Group Corporate Banking Leong Yung Chee. &#8220;We look forward to a fruitful journey with ADDX.&#8221;



Funding will go towards scaling efforts, onboarding general partners and future product innovations that will attempt to bridge traditional and digital finance, ADDX said.



As part of the deal, the new shareholders will also partner with ADDX on specific projects that will assist the exchange in expanding into new business verticles, geographies and market segments.



“ADDX is on a mission to democratise the private markets,&#8221; ADDX CEO Oi-Yee Choo said in the statement. &#8220;This Pre-Series B round sets ADDX up strongly for long-term success.&#8221;



ADDX is owned and operated by ICHX Tech Pte Ltd which, in turn, has been recognized by MAS as a market operator and holds a capital markets services license which grants the parent company the right to deal in securities and provide custodial services.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Blockchain-Based Securities Exchange ADDX Gets $58M to Scale Operations

Sam Reynolds

<div id="highlights-block_61c1b47aefad3" class="highlights">
 <ul>
 <li>Tokenized real-world assets haven’t taken off because while the technology might be sound, the legal side is shaky</li>
 <li>Companies attempting to tokenize real-world assets aren’t anything new. But these are tech companies without legal expertise</li>
 </ul>
 
</div>



Any trader knows the importance of a diversified, balanced portfolio. The dream for digital assets traders is to have their volatile crypto counterbalanced with tokenized real-world assets like real estate, art, or rare liquor.



But despite the numerous attempts at creating tokenization platforms over the past years across a variety of asset classes, nothing has quite captured the confidence of investors. Tokenized real world assets exist, but their volume is tiny compared to their non tokenized selves.



After all, the technology side of things isn’t overly complex; it’s the legal side that will literally make or break things.



“It&#8217;s a hugely complex legal problem,” explains <a href="https://www.dlapiper.com/en/hongkong/people/t/thiel-scott/" target="_blank" rel="noreferrer noopener">DLA Piper’s Scott Thiel</a>. “For an NFT of an artwork, and there’s a single token and single owner, the legal issues in there are relatively straightforward. The problem gets far more complex when you start thinking of higher value real-world assets.”



<div class="wp-block-image"><figure class="alignright size-medium"><img loading="lazy" decoding="async" width="300" height="300" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/DLA-Piper-Scott-Thiel-300x300.jpeg" alt="DLA Piper's Scott Thiel" class="wp-image-12994" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/DLA-Piper-Scott-Thiel-300x300.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/DLA-Piper-Scott-Thiel-300x300.jpeg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/DLA-Piper-Scott-Thiel-300x300.jpeg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/DLA-Piper-Scott-Thiel-300x300.jpeg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/DLA-Piper-Scott-Thiel-300x300.jpeg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/DLA-Piper-Scott-Thiel-300x300.jpeg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/DLA-Piper-Scott-Thiel-300x300.jpeg?w=400 400w" sizes="(max-width: 300px) 100vw, 300px" /><figcaption>Scott Thiel</figcaption></figure></div>



Thiel is DLA Piper&#8217;s lead TOKO partner based in Hong Kong. He says that the firm has been exploring tokenization for some time now, but just wasn’t confident in the legal soundness of the existing solutions out there. 



“We spent a considerable amount of time speaking with technology companies that were doing tokenization,” he said. “One of the challenges we had is they didn’t really share our vision of dealing with the more complex asset classes and the need for compliance with all these sophisticated financial services regulations.&#8221;



Most investors are going to want their tokenized asset to generate yield — rental income from a building, for instance — while also being able to benefit from the capital appreciation of the asset, all the while having it as liquid as any other token in their wallet.



Sure, there are existing TradFi structures out there like a REIT, but as Thiel puts it, “I’ve yet to speak to anyone that’s attached to or regularly trades in their REIT.”



The problem is tokenization products that offer yield would most likely be a security, which, if done the wrong way, can create legal headaches or worse.



<blockquote class="wp-block-quote">“As you go into that space you quickly find that the digital asset can quickly cross the line from being an unrelated bundle of contractual rights to being a regulated security token, or a collective investment scheme, or some other financially regulated thing in whatever market you might be talking about,” Thiel said.</blockquote>



<h3 class="wp-block-heading">Where is demand strongest for tokenized assets?</h3>



There’s a perennial east versus west debate in crypto — are the trading desks in New York better equipped because of investor maturity and regulation than Hong Kong or Singapore — and the same goes for tokenization.&nbsp;



Thiel thinks that Hong Kong has the edge over Europe, which might be surprising since Switzerland is home to “arguably the most sophisticated digital asset regime on the planet”. One might think that given London’s proximity to it and ease of access, there would be a spillover effect.&nbsp;



“One thing that has been striking to me is the maturity of debate we saw at conferences in Hong Kong seemed to be the highest,” Thiel said. “From a topic point of view, the conferences in London sound a bit like what happened in Hong Kong last year.”



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your inbox every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
<hr class="wp-block-separator">

Toko Pursues Dream of Tokenized Assets

Jacquelyn Melinek

<div id="highlights-block_60f1d642dc7ca" class="highlights">
 <ul>
 <li>The change goes into effect immediately and stock tokens will be unavailable for purchase, but users who currently hold stock tokens may hold them over the next 90 days but must sell them by October 14</li>
 <li>European users can transition their positions onto CM-Equity AG portal once the new portal is established about two to four weeks prior to the sell date</li>
 </ul>
 
</div>



The world’s biggest digital assets exchange, Binance, announced Friday that it will cease support for stock tokens on its trading service platform.&nbsp;&nbsp;



The company’s stock tokens were launched in April and previously let customers buy representations of stock, without paying commission fees, in five publicly traded companies: Apple, Coinbase, Tesla, Microsoft and MicroStrategy. All the Stock Tokens listed are products issued and sold by German financial services provider CM-Equity AG, the company said.&nbsp;



At the time of the announcement, there was about <a href="https://www.binance.com/en/stock-token">1 million</a> Binance USD in trading volume on the platform. “We will be winding down support for stock tokens on Binance.com to shift our commercial focus to other product offerings,” the company said in a blog <a href="https://www.binance.com/en/support/announcement/3a0304f3ee1c43668959c1b01f610d59">post</a>.&nbsp;



The change goes into effect immediately and stock tokens will be unavailable for purchase, but users who currently hold stock tokens may hold them over the next 90 days but must sell them by October 14. If holders don’t sell by that date, all stock token positions will be closed on October 15, it said.&nbsp;



However, European users can transition their positions onto the CM-Equity AG portal once the new portal is established about two to four weeks prior to the sell date.&nbsp;



Globally, Binance has been facing a list of challenges and restrictions from governments and regulators.&nbsp;



Hong Kong’s Securities and Futures Commission (SFC) put out a warning <a href="https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=21PR76">statement</a> today on unregulated virtual asset platforms, specifically Binance. It said Binance is not licensed or registered to conduct “regulated activity” in Hong Kong.



“The SFC does not tolerate any violations of the securities laws and will not hesitate to take enforcement action against unlicensed platform operators where appropriate,” said Thomas Atkinson, the SFC’s executive director of enforcement. “Investors should be wary of the risks of trading virtual assets on an unregulated platform.&nbsp; If the platform ceases operation, collapses, or is hacked, investors may face the possible risk of losing their entire investments held on the platform.”



A report from Protos alleges that the company is based in Hong Kong, given that the exchange requires users to use the <a href="https://www.hkiac.org/">Hong Kong International Arbitration Centre</a> in the event of a dispute. Binance registered a new company in the territory earlier this year, and its CEO Changpeng Zhao, or “CZ,” recently <a href="https://twitter.com/cz_binance/status/1413079229009317888">posted pictures on Twitter</a> from the City.  



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Maybe. HK International Arbitration Center is a massive hub that serves all of Asia. So that&#39;s not a smoking gun. But, according to the HK Corporate Registrar, Binance registered a company in the territory on May 1 2021. <a href="https://t.co/RakPZEEW3e">https://t.co/RakPZEEW3e</a> <a href="https://t.co/zFMJeUIxAo">pic.twitter.com/zFMJeUIxAo</a>&mdash; Sam Reynolds (@thesamreynolds) <a href="https://twitter.com/thesamreynolds/status/1412841996809506818?ref_src=twsrc%5Etfw">July 7, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Separately, UK’s Financial Conduct Authority (FCA) recently warned that Binance Markets Limited — a subsidiary of Binance — is not “permitted to undertake any regulated activity” in the country, Blockworks <a href="https://cms.blockworks.co/uk-fca-binance-ban-not-prohibiting-british-traders/">reported</a>. And earlier this year, The US Commodity and Futures Trading Commission (CFTC) is said to be <a href="https://cms.blockworks.co/binance-said-to-be-probed-by-cftc-over-derivatives-trading/">probing Binance</a> for allowing US nationals to trade on its platform, according to a report by Bloomberg.&nbsp;



Binance has been under scrutiny for a number of reasons over the past few months, as regulators also in Japan, Germany, Canada and Thailand have raised concerns about the company and its practices, but Binance said it remains “committed to moving the crypto ecosystem forward.”

tokenized stocks