By
Steve Muchoki
April 19th, 2024
Equity crowdfunding platform SeedInvest has managed to receive FINRA approval to operate an alternative trading system (ATS).
As it has been announced SeedInvest, the leading equity crowdfunding platform that was recently acquired by crypto startup Circle, got permission to operate an ATS (Alternative Trading System) which is aimed at facilitation of private equities secondary trading. Nevertheless, it’s worth mentioning that these equities can’t be tokenized.
ATS License
The company has disclosed that it managed to receive an ATS license from the FINRA (Financial Industry Regulatory Authority), the U.S. broker-dealers and securities exchanges watchdog. Having this approval, the crowdfunding startup can provide investors with a wide range of new opportunities.
For example, SeedInvest is expected to enable investors to trade their startup shares, including startup shares after the initial investment, on the secondary market as soon as the platform for trading is officially launched.
SeedInvest is considered to be the first equity crowdfunding platform that has managed to receive FINRA approval under which it has the right to operate a secondary trading marketplace.
Commenting on this new milestone, Ryan Feit, Co-Founder of SeedInvest, noted:
“Liquidity remains a key missing piece towards democratizing the private capital markets. Creating a truly vibrant secondary market for private company shares has the potential to make startup investing a significantly more attractive asset class.”
What about Tokenization?
Though SeedInvest is now actively working on providing new solutions the aim of which is to facilitate secondary trading of equity, now we can speak only about the trading of traditional securities.
Nevertheless, as it has been revealed by Circle which is SeedInvest’s parent firm, this initiative is already a very important move towards translating the idea of tokenized securities into life.
The plans of Circle to find an appropriate way to tokenize securities were announced by the company’s CEO Jeremy Allaire in the context of their intention to acquire SeedInvest last year.
At that time he stated that crypto securities have all chances to become a major category of securities and even named them a new must-have for businesses just like a website.
However, at the moment it’s absolutely unclear when SeedInvest will be ready to add tokenized securities to its platform.
Allaire explained their vision the following way:
“We’re focused on empowering individuals and business to create and share value in ways that are more open, inclusive, efficient and global.”
“ ATS approval for SeedInvest sets us on a path to develop secondary trading marketplaces and to facilitate liquidity for private securities, which together hold the promise of significantly democratizing private capital markets”, added he.
According to its CEO, Circle wants to provide accredited and unaccredited investors with a possibility to participate in fundraising projects on the same terms. And this new ATS initiative is an important part of the wider mission.
Nevertheless, Allaire noted that there is still much to do from a regulatory and technical perspective. But SeedInvest and Circle are planning to continue their collaboration with regulators with a view to creating new products and bringing positive changes to the financial system.