Investment platform Republic is trying to bring the security token back with its listing of the Republic Note on US-regulated crypto trading platform INX.
Security tokens are digital assets that represent rights to traditional investments such as stocks and bonds on the blockchain and give holders a share of the profits from the investments. The Republic Note is a digital asset that represents the over 750 private companies as well as other assets within Republic’s portfolio. It will give retail and accredited investors access to the financial upside of Republic’s vast portfolio, which features companies including SpaceX, Carta and Dapper Labs.
Every time the profit pool reaches $2 million, dividends will be paid out to Note holders, according to the company website.
Since inception in 2016, over $2.6 billion has been deployed into privately held ventures via the Republic platform. The company itself has also raised over $200 million from venture and investing titans such as Valor Equity Partners, Galaxy Interactive, Brevan Howard and Morgan Stanley.
The Republic Note is set to list on INX.One on Dec. 6 and is generated via the Avalanche blockchain. Republic is currently in the process of acquiring INX with the acquisition agreement set to finalize in February next year.
Republic raised $30 million in a pre-sale of the Republic Note from investors including Binance, Naspers and the Avalanche Foundation’s Vista program.
Growing Regulatory Scrutiny
Republic’s potential acquisition of INX comes as regulatory scrutiny intensifies on the crypto industry with allegations from the U.S. Securities and Exchange Commission (SEC) that many crypto tokens are unregistered securities. The agency has cracked down on crypto exchanges for the sale of unregistered securities, among other charges.
INX is registered with the SEC and holds money transmitter licenses in most US states as well as broker dealer and alternative trading system licenses granted by the SEC and the Financial Industry Regulatory Authority (FINRA). INX was the first company to complete a security token offering with the SEC in 2021, and raised $85 million from the listing.
While security token offerings were all the rage in 2018 after the initial coin offering (ICO) boom-and-bust cycle, most of the focus in recent crypto cycles has returned to utility tokens, which are used in the governance or operation of blockchains or blockchain projects. The SEC is now alleging many of these utility tokens are in fact securities, a claim blockchain projects push back on.
This isn’t the first time Republic has tried to launch the Republic Note. It previously announced the token would launch on Algorand in July 2020, but it has since pivoted to Avalanche, citing the blockchain’s scale, speed and customizability. Avalanche is also one of Republic’s portfolio companies.