Introduction
The Global Layer One ("GL1") initiative, spearheaded by the Monetary Authority of Singapore ("MAS"), aims to establish a transformative Distributed Ledger Technology ("DLT") infrastructure tailored for the financial industry. This initiative envisions a versatile shared ledger that facilitates the deployment of interoperable digital asset applications by regulated financial institutions. The Ohanae OTC Market Platform ("Ohanae Platform"), focusing on the U.S. Capital Market, aligns closely with this vision.
The Ohanae Platform supports Digital Asset Securities, known as equity tokens, and manages cash equivalents within Special Reserve Accounts ("SRA") using deposit coins or Ohanae Coins ("OUSD"). Operating within the regulatory framework set by the U.S. Securities and Exchange Commission ("SEC"), the platform ensures compliance and security across all its operations.
Regulatory Foundation and SEC Alignment
The Ohanae Platform is meticulously designed to comply with the SEC’s guidelines on the custody of digital asset securities by Special Purpose Broker-Dealers ("SPBD") as detailed in the Federal Register. These guidelines provide a five-year safe harbor for broker-dealers to custody digital asset securities without facing enforcement actions, provided they meet specific conditions. These conditions include maintaining rigorous custody controls, securing the management of private keys, and preparing for potential blockchain-related contingencies. By adhering to these regulatory requirements, Ohanae guarantees a secure and compliant environment for managing equity tokens and other digital asset securities.
Core Components of the Ohanae Platform
Equity Tokens and Ohanae Coin
- Equity Tokens:
Equity tokens are digital representations of ownership in a company, facilitated through the Ohanae Platform. These tokens comply with federal securities laws and modernize the processes of issuing, trading, and settling securities. By utilizing blockchain technology, equity tokens streamline these processes, enhancing efficiency and regulatory compliance. - Ohanae Coin ("OUSD"):
OUSD is a stable, non-security digital asset within the Ohanae ecosystem, pegged 1:1 to the U.S. dollar. Fully backed by bank deposits, these deposit coins ensure value preservation and redeemability. OUSD serves as a reliable medium for transactions on the platform, supporting liquidity and operational efficiency.
Technological Infrastructure
The Ohanae Platform's technological backbone is built on state-of-the-art blockchain technology, providing secure and efficient operations. Its primary components include:
- Ohanae Blockchain: A permissioned blockchain featuring 16 nodes and utilizing the IBFT consensus algorithm, which ensures fast and secure transaction validations.
- Equity Token Protocol: This protocol is compliant with the Delaware General Corporation Law, enabling the tokenization and management of securities as equity tokens.
- Digital Transfer Agent: Registered with the SEC, this agent oversees the issuance, tracking, and management of equity tokens.
- Automated Market Maker ("AMM"): Integrated into the Ohanae Alternative Trading System ("ATS"), the AMM provides continuous trading and liquidity for equity tokens.
- Private Key Protection and Passphrase Recovery: These features safeguard user assets against unauthorized access and potential loss, ensuring secure asset management.
Compliance and Security
Regulatory compliance is a cornerstone of the Ohanae Platform. Its operations and policies align with the SEC's conditions for the custody of digital asset securities, including:
- Access and Capability: Demonstrating the ability to securely manage and transfer equity tokens on blockchain.
- Exclusive Focus: Concentrating operations on digital asset securities to reduce risks and enhance security.
- Distributed Ledger Technology Assessment: Regularly evaluating the blockchain infrastructure to ensure robustness and regulatory compliance.
- Contingency Planning: Developing comprehensive plans to address potential blockchain disruptions, ensuring operational continuity and reliability.
Business Model and Market Strategy
Ohanae's business model aims to revolutionize capital raising for semi-public companies under the Reg A+ exemption by facilitating the issuance and trading of equity tokens. Key strategic elements include:
- Growth Capital Raise: Launching a Regulation A+ offering to raise approximately $30 million through OUSDs, which will fund the platform's continuous enhancement and operational needs.
- Market Expansion: Initially targeting the U.S. market, with plans for expansion into additional jurisdictions as regulatory conditions and demand evolve.
- Diverse Product Offerings: Supporting a wide range of securities beyond unrestricted common stock to cater to various issuer and investor needs.
User Experience and Accessibility
The Ohanae Platform is designed to offer a seamless and user-friendly experience for both issuers and investors. Notable features include:
- Ohanae Connect: A secure, passwordless login system that ensures safe and easy access to the platform.
- Comprehensive Cap Table Management: Tools for managing investor information, equity token issuance, and financial transactions efficiently.
- Multi-Jurisdictional Support: Although initially focused on the U.S., the platform is built to accommodate global regulatory requirements, facilitating cross-border equity token issuance.
Strategic Vision
Ohanae envisions a future where capital markets are more accessible, transparent, and efficient. Through its innovative use of blockchain technology and stringent regulatory compliance, the platform aims to:
- Facilitate Equity Crowdfunding: Empowering companies to raise capital through tokenized equity offerings, democratizing access to funding.
- Enhance Liquidity and Trading: Providing continuous trading opportunities for equity tokens via its integrated AMM-based ATS.
- Promote Investor Protection: Ensuring that all equity tokens are securely managed and fully compliant with federal regulations.
Conclusion
The Ohanae Platform is at the forefront of transforming capital markets by providing an integrated solution for managing and trading equity tokens. It aligns with the Global Layer One (“GL1”) initiative and adheres to the guidelines set by the U.S. Securities and Exchange Commission (“SEC”). This ensures that Ohanae offers a secure, compliant, and efficient marketplace for digital asset securities. By focusing on regulatory compliance, technological innovation, and user accessibility, Ohanae is positioned as a pivotal force in the modernization of capital markets, leading towards a transparent and efficient financial future.
As Ohanae continues to develop, it is set to play a significant role in the digital asset securities space. By creating a trusted and regulated environment for issuing and trading equity tokens, Ohanae is redefining the landscape of capital markets in the digital age. This transformation promises to enhance efficiency, transparency, and opportunities for both issuers and investors, establishing Ohanae as a cornerstone in contemporary financial systems.
However, the adoption of the GL1 initiative in the U.S. market presents unique challenges. Given the vast size, complexity, and stringent regulatory framework of the U.S. securities market, the SEC may prefer a U.S.-specific version of GL1. This approach could better align with local regulations and market practices, addressing the distinct needs and regulatory requirements of the U.S. financial system.
Disclaimer
Ohanae Securities LLC is a subsidiary of Ohanae, Inc. and member of FINRA/SIPC. Additional information about Ohanae Securities LLC can be found on BrokerCheck. Ohanae Securities LLC is in discussions with FINRA about exploring the expansion of business lines for the broker/dealer. Any statements regarding abilities of Ohanae Securities LLC are subject to FINRA approval and there are no guarantees FINRA will approve the broker/dealer’s expansion.
Ohanae Securities is seeking approval to be a special purpose broker-dealer that is performing the full set of broker-dealer functions with respect to digital asset securities – including maintaining custody of these assets – in a manner that addresses the unique attributes of digital asset securities and minimizes risk to investors and other market participants. If approved, Ohanae Securities will limit its business to digital asset securities to isolate risk and having policies and procedures to, among other things, assess a given digital asset security’s distributed ledger technology and protect the private keys necessary to transfer the digital asset security.