Digital capital raising platform Globacapalong with regulators, has developed automated processes to issue equity and debt securities as tokens on a public blockchain. The processes include checks to address KYC/AML requirements, making it the first equity issuance on a public blockchain with regulatory oversight.
While ICOs give startups greater access to capital and investors greater ROI, ICOs are also fraught with controversy. The Pincoin fraud, for example, raised $660 million before its founders vanished and left investors high and dry. Regulation is necessary to mitigate fraud and establish trust; however, there isn’t a consensus among regulators about what to do regarding ICOs: some have banned them, while others propose restrictions.
Regulation will facilitate the introduction of institutional investors into the ICO market. Currently, most have strict restrictions on investing in unregulated assets. Incorporating regulation will provide institutional-grade due diligence and necessary financial information on all investments within the platform.
The platform also minimizes fees, and increases efficiency via automation and standardization. Each equity or debt security is issued as a token on a public blockchain. This provides a way to list the security on multiple trading venues, allows for instant trading, and offers a more cost-efficient way to manage the security.
While Globacap utilizes a streamlined approach to capital raising (similar to crowdfunding platforms) it goes a step further by providing institutional investors a level of due diligence that they require.
Startups seeking funding through Globacap can choose from set templates that standardize the requirements needed to issue funds. Projects can institute page-specific access that restricts information to specific investors or groups.
On the investors’ end, investors go through automated KYC/AML procedures during the registration process. Then, they can allocate funds to investments across a broad range of cryptocurrencies and fiat currencies.
The Globacap platform is designed to accommodate small and medium-sized enterprises, which don’t often have access to a global investor pool. The platform gives them a global reach while simplifying the administrative process. Globacap also eliminates the lack of transparency that plagues traditional banking platforms, with the intent to protect both the startup and its investors.
In July, Globacap will issue its own GCAP token through its own platform. Each token will be available for ETH 0.0004. The GCAP tokens will be listed in a regulated crypto trading exchange by year end, and will be listed in additional exchanges in 2019.