🇭🇰Hong Kong & OSL Are Killin' The Game
Let's talk SPVs & OSL - the Hong Kong trailblazing security token marketplace
Have you heard of Faer Isles Distillery? They are raising capital for a whisky distillery in the Faroe Islands! 🇫🇴
Interested in investing & learning more? Head on over to Faer.io!
Gooood Morning Rainmakers,
Motivational quote of the week:
“Whatever the mind of man can conceive and believe, it can achieve.” – Napoleon Hill
Go kill it this week and…
Get liquid 🌊
Special Purpose Vehicles (SPVs) 🚖
Have you ever wondered how you can invest in supercars, paintings, individual real estate properties, or unique asset types in general?
Like, really think about it.
For example, when you invest in a supercar, you don't put your money in the glove compartment and just assume you are an investor… at least I don't.
When you make an investment, you are actually investing in a company that owns the asset(s).
For instance, in one of my previous newsletters, I discussed how you can own supercars for a fraction of the price, but in order to actually own an equity stake in the car, you have to invest in a company that owns the car.
This ‘company’ is what we call a ‘Special Purpose Vehicle' or SPV for short.
You can think of an SPV as a subsidiary of the parent company.
Let's get basic:
SPVs are essentially an easier way to raise capital via crowdfunding by adding multiple investors to the cap table, while at the same time minimizing risk to the parent company by establishing a completely different entity and balance sheet.
Kyle Sonlin, Security Token Market CEO, explained it well: “They can be efficient structures to manage a syndicate of investors and offer faster liquidity, because the SPV represents a legal structure that allows investors to group together and act as a corporation instead of a group of individuals, presenting many functional benefits to investors.”
This is what we are seeing happen in the security token space.
Here is a prime example of a sucessful SPV:
The marquee 5-star hotel, St. Regis Aspen Resort utilized the SPV legal structure.
The owners of the resort were looking into financing solutions and came to the conclusion that conducting an STO was the most feasible one.
They established an SPV (subsidiary to the parent company) that represented 18% of the property.
Through this SPV, they successfully raised $18 million via the Regulation D 506(c) private securities exemption from a group of accredited investors.
So, in essence, if a company or an individual owns an asset and they want to liquidate it, all they have to do is set up an SPV.
I mean if your Van Gogh painting is just collecting dust and for some reason, you don't want it anymore, this is a very legitimate solution for you and one that we will see time and time again.
Something to think about :)
Everyone, please give a warm welcome to OSL 👏
To be quite honest, I am not for certain what OSL stands for.
Maybe it's Orangutang, Stupendous, Legendary.
Nah, that can't be it.
At the end of the day, it doesn't matter very much, I got your attention, didn't I? 😉
Now that I have your undivided attention and curiosity.
Let's dive into OSL.
OSL is Asia’s largest digital asset platform, providing prime brokerage, custody, exchange, and SaaS services for institutional clients and professional investors.
They were the first approved platform in the Hong Kong jurisdiction to have legal approval to trade security tokens!
On top of that, they were audited by the Big Four auditing firm, PWC, which greatly added to their reputation.
OSL positioned itself correctly to obtain licensure from the SFC (Hong Kong's SEC equivalent), by following all of the required compliance and regulatory rulings.
However, none of this would have been possible, if it wasn't for the SFC and the legal clarity they implemented for the Hong Kong digital asset industry.
As I alluded to in previous newsletters, companies will be less inclined to participate in business activities that are in grey areas.
Not only does doing this waste time and resources, but you can also land in hot water with the regulatory authorities, which is a big no no.
You either comply or die.
Now that regulatory clarity has been granted by the SFC, Hong Kong is ready to blossom.
And that's exactly what we witnessed just a couple of weeks ago…
OSL conducted Hong Kong's first security token transaction!
The token that traded was the Blockchain Capital (BCAP) token.
It has been trading on the OpenFinance marketplace since March of 2019 and hasn’t traded anywhere else to my knowledge.
live-trading data here.
There is an inflection point imminently approaching in the financial world.
If other countries don't follow suit, they will be left in the dust.
What else is making it rain ☔️
Archax & DigiShares Announce Strategic Partnership: They are teaming up to enable a secondary liquidity solution for real estate assets tokenized on the DigiShares issuance platform!
INX Continues Its Shopping Spree: This past week, they announced the purchase of an Israeli-based interdealer-broker, ILS Brokers, LTD
Trivia of the week 🎮
Which part of the human body cannot heal itself?
Hint: It is crucial for eating food
Reply to this email with what you think the answer is!
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Thanks for tuning in! Keep an eye out each Monday for the next security token adventure 🧗♀️
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Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.