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Globacap, a digital capital raising platform, has worked with regulators to develop automated processes to issue equity and debt securities as tokens on a public blockchain. The company will be offering the first equity issuance on a public blockchain with regulatory oversight, including checks to address KYC/AML requirements.
ICOs have given businesses greater access to capital, and investors greater access to liquidity. However, alongside this powerful innovation, there have so far been many allegations of fraud, such as Pincoin, which raised $660 million before the founders disappeared. Regulation is important to reduce fraud and create trust, however, regulators have issued varying responses to ICOs, with some outlawing them and others proposing restrictions.
Incorporating regulation into the market enables institutional investors to participate, as most have restrictions on investing in unregulated assets. In addition, Globacap is providing institutional grade due diligence and financial information on all investments through the platform.
The platform minimizes fees and enhances efficiency via automation and legal standardization. The platform issues each equity or debt security as a token on a public blockchain, providing a more cost efficient way to manage the security, and to list that security in multiple trading venues. Issuing a security in blockchain also allows for instant settlement, which is a significant efficiency improvement over current securities markets.
Globacap takes the streamlined approach to capital raising adopted by crowdfunding platforms but goes a step further, providing the level of due diligence that institutional investors require. In addition, the ability for tokens to list on an exchange gives investors access to liquidity.
Companies seeking funding through Globacap will choose from set equity or debt templates that standardize the legal requirements needed to issue funds, however, companies can also permission pages individually, restricting information to specific investors or groups of investors.
Investors go through an automated KYC/AML check during the registration process, and can then allocate to investments across a range of fiat and cryptocurrencies.
The platform handles currency conversion: businesses receive their base currency once the funding process has been completed. Similarly, coupons and dividends can also be converted, allowing investors to receive distributions in Ether.
In the event that an investor loses their private key, the platform is able to lock, burn and re-issue tokens. Which is an important regulatory concept with regard to safeguarding assets.
The Globacap platform is designed for small and medium-sized enterprises (SMEs), which comprise 67% of all European private sector employment and 57% of value added, as measured by the European Commission in 2016.
SMEs don’t often have access to a global investor audience, and are weighed down under the administrative burden of managing investors and regulatory compliance after a capital raise. The Globacap platform gives businesses global reach, while simplifying the administration post-issuance.
The platform also eliminates the lack of transparency that exists in traditional banking platforms, providing equal rights and protection to both investors and companies.
The Globacap platform is scheduled to be live for businesses in October 2018.
Globacap is issuing its own GCAP token through its own platform in July, representing a legal equity share, with full dividend and voting rights. Every token will be available for ETH 0.0004 each.
The Digital Security Offering (DSO) in July will raise 6,648 ETH for a 10.5% shareholding, selling 16.62 million GCAP tokens.
The tokens will be listed in a regulated trading exchange by the end of 2018, with additional exchanges in 2019.