Blockchain Secondary Market Planned Amid Explosion of Interest

LAGOS (Capital Markets in Africa) – A new way for accredited investors to put money into blockchain startups is opening up.

A firm called BnkToTheFuture plans to open a market in the second quarter that will let investors trade equity stakes in companies involved with the blockchain, the transaction-tracking technology that underpins digital currencies like bitcoin. BnkToTheFuture will use a blockchain ledger to keep record of those investments for clients.

Its impending market will join a slew of other ways to bet on blockchain startups, including investing in tokens issued by the companies or in various indexes and funds tracking such digital currencies. BnkToTheFuture also competes with the likes of the Nasdaq Private Market, but it’s focused on blockchain and fintech companies.

“By year-end, we could have 50 percent of the major companies in the sector on our platform,” Chief Executive Officer Simon Dixon said in a phone interview.

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The marketplace debuts just as interest in the blockchain — a digital ledger for recording transactions in a secure and transparent manner — is at an all-time high. This year alone, more than $3.6 billion has been invested into initial coin offerings, a fundraising method mostly used by blockchain-related startups, according to CoinSchedule. The technology is expected to revolutionize industries ranging from finance to supply-chain management.

BnkToTheFuture has already helped some 45,000 accredited investors from around the world invest more than $200 million. It has let investors buy equity in more than 100 companies and projects, including ethereum and storj, though selling those stakes can be difficult. The new secondary market will use the blockchain to allow such trading.

Equity-backed tokens will be bought and sold via a technology built on top of the ethereum blockchain. A token BnkToTheFuture will issue next year should also let people pay for deal analysis, due diligence and investor relations. BnkToTheFuture hopes to raise as much as $33 million in an initial coin offering planned for next February.

BnkToTheFuture is registered in the Cayman Islands, and holds a stake in a broker-dealer. The company holds equity in companies, such as cryptocurrency exchanges Bitstamp and Kraken, trading on its platform as well. It’s better known in Asia than in the U.S., according to Kyle Samani, managing partner at Multicoin Capital Management, a crypto hedge fund.

“Their investment opportunities are vetted quite extensively and it seems only very few get accepted judging from the amount of investments that pass through their platform,” Majid Shah, the co-founder of CoinSchedule and a long time user of BnkToTheFuture, said in an email. “I would say they provide a lower-return but lower-risk way of investing into the blockchain space, whereas ICOs are more high return, high risk.”

Source: Bloomberg Business News