TokenSoft distributes $4 million of tokenized shares to investors using Ethereum

TokenSoft, a security token issuance and platform, has used its own product to distribute equity to investors from its $4 million seed round raised almost two years ago. The company issued the tokenize shares on Ethereum using the ERC-1404 standard, which allows issuers to restrict certain transfer types to remain compliant with securities laws and any contractual obligations. According to TokenSoft, its investors will soon have access to real-time dividend payments in USD, by way of Signature Bank’s Signet platform, as well as the ability to buy and sell these shares on the secondary market.

Why it matters:

• Despite receiving a lot of attention, tokenized securities have been slow out of the gate. They weren’t crypto enough for most investors knowledgeable on the matter, and traditional investors failed to see the appeal of tokenization over the norm. However, tokenizing shares has some perceived benefits, including improved access to secondary markets (as highlighted by TokenSoft). But the efforts to built more robust market infrastructure (e.g., Overstock’s tZERO) have not yet led to an increase in investor demand.
• ERC-1404 was of the deluge of security tokens standards introduced on Ethereum from 2017 into 2018. Compared to the other, perhaps more robust alternatives (like the ST-20 or R-Token standards), it aims to offer a more straightforward way to restrict token transfers for instances such as enforcing token lockup periods. See a full break down of some early security token standards in A Whirlwind Tour of Security Token Standards.