Abstract: Exponential growth in online investment and a corresponding increase in identity regulation present a unique set of challenges for financial firms operating in a global world. Investors now demand instant access to a broad set of financial products across multiple verticals, but legacy institutions and systems cannot keep up. The largest points of friction stem from outdated onboarding processes that not only delay investment and frustrate investors, but also generate significant data vulnerabilities and fail to achieve their stated goal in preventing crime.
There is a massive opportunity to be had in developing a robust and frictionless solution that…
Nicholas Goss | June 16, 2020
A number of well-financed players are competing to be the first to bring a viable private securities exchange to market. The objective is not a new one. We are in the middle of a thirty-year trend of increased efficiencies and liquidity in privately held securities, but the race does seem to be heating up. In just the past couple of months:
- Carta, a leader in the capitalization table management space, announced CartaX, its private share trading platform that promises to replace Nasdaq and the NYSE as the exchange of choice for issuers;
- GTS, one…
Nicholas Goss | January 16, 2020
On December 18, 2019, the Securities and Exchange Commission released a proposed amendment to the definition of an “accredited investor” that would broaden the categories of qualifying persons and entities. The new categories are based on, among other things, professional knowledge, experience and/or certifications. Accredited investor status is important because, under U.S. securities laws, accredited investors may participate in investment opportunities that are generally unavailable to the wider public, including investments in private companies and funds. …
Nicholas Goss | January 6, 2020
Parallel Markets is excited to announce that FarmTogether, a technology-driven investment platform, is integrating the Parallel Passport to make investing in farmland easier than ever before.
Farmland represents an extremely attractive investment opportunity, both in the United States and globally, due to its low correlation to other asset classes, stable returns, cash yields, potential for price appreciation and its inflation- and recession-resistant characteristics. Unfortunately, these investments have historically been held within the exclusive purview of select institutional investors and family-owned businesses. Limitations on broader investor involvement have directly contributed to farmland remaining undervalued as…
Nicholas Goss | December 13, 2019
Parallel Markets is excited to announce that DiversyFund, an industry leader in technology-enabled real estate investing, has integrated the Parallel Passport to service its investor identity and accreditation needs.
Onboarding and securely verifying investor identity is the primary friction point in conducting online investments. Not only do potential investors have to upload sensitive personal information in order to access deals, they must do so repeatedly across multiple sites as cross-platform communication is largely nonexistent. In addition, deal platforms and issuers take on the burden of reviewing and verifying any information provided. …
By Nicholas Goss | October 28, 2019
Once upon a time, in the United States capital markets, plucky entrepreneurs raised seed rounds from supportive friends and family with no more than a relatable idea and a can-do attitude. The vast majority of these ventures would ultimately fail. Creating something from nothing is extremely difficult, and a lot of these would-be scions of capitalism instead became cautionary tales. …
The takeaway: The SEC’s statement acknowledging that Ether is not a security is beneficial for the crypto community because it provides market participants the opportunity to gain valuable insight into how regulators are thinking about token issuances. While BTC and ETH are largely being grandfathered in, the SEC’s stated framework implies that all future token issuances will be subject to securities regulation from inception. The critical question moving forward is determining the point at which a network becomes so “sufficiently decentralized” as to no longer constitute a security. This question is not new — courts and regulators have examined the…
The takeaway: security ownership in the United States is a convoluted mess consisting of multiple layers of intermediate ownership that stems from an archaic system design. Think of the New York subways — the heavy lifting involved in a full revamp of the base will never be preferred to a facelift on the existing structure. Repeated facelifts can lead to absurd results when aggregated together in the face of technological advancement. …
The takeaway: security tokens are the future. They are the key to unlocking billions of dollars in value tied up in private markets, but a successful security token offering requires navigation through a complex set of existing regulations. While there is no magic bullet to solving the regulatory puzzle, there are a number of tools in the corporate finance toolkit issuers can use, each of which comes with its own set of benefits and drawbacks.
Last week was an interesting one to leave the relative monotony of high finance for the crypto world. My first week as COO of Futurism…
Nick Goss
Retired lawyer, former banker, Co-Founder and COO @ParallelMarkets
