London-based blockchain firm Globacap announced plans to start issuing equity securities via a public blockchain. The firm plans to start the sale with approval from the UK’s top financial regulator, the Financial Conduct Authority. Globacap will begin by selling its own securities.
What Is An Equity Security?
An equity security is a financial holding that signifies an ownership share in a corporation. It often also represents a claim on a proportionate share of the corporation’s assets and profits.
The firm aims to allow small and medium enterprises (SME) to sell shares to investors all around the world, and to do this, Globacap turned to a blockchain solution. Globacap targeted the SME market because it has 67 percent of all private sector employment, the company’s press release reveals.
Many investors avoid ICOs of SMEs because of the lack of regulation. Globacap plans to solve this by introducing a new financial instrument they call the ‘digital equity security.’
These are tokens that represent a kind of legal share in a UK company. According to their press release, Globacap says they worked with legal advisors to ensure the legality of their token. This also means that investors and businesses must be fully registered with the company. The company says the token works with the FCA, thereby guaranteeing full compliance.
In The Sandbox
Globacap starts operations in a few days with a fundraiser for itself, which will also be a test of its own capabilities. The company will be working within the confines of the FCA’s sandbox environment.
A sandbox is a closed environment that allows firms to test products without negatively impacting the market or accidentally breaking laws. The FCA has maintained a sandbox since 2016, with it’s latest iteration, called ‘cohort four,’ receiving applications from 69 firms, with almost half of them involving blockchain technology.
Globacap plans on selling its own equity in the form of a crypto-token. The digital security offering is to ensure that investors receive a return on their investment, something that is not always the case with unregulated ICOs.
The firm plans on selling 15 Million of its GCAP tokens, which they say functions in the same way as regular shares.
Globacap’s CEO Myles Milston expressed his enthusiasm for the venture, saying that:
“This is transformative to the securities industry, paving the way for small and mid-sized businesses to more efficiently access a wider pool of global capital. The Innovate team at the FCA have been pivotal in this milestone, allowing us a quicker route to launch our proof of concept while having regulatory oversight.”