The rise of tokenization has sparked widespread interest across industries, from real estate to equity markets. However, not all tokenization models are created equal. A key distinction exists between tokenization of securities and tokenization of real-world assets (RWA)—a difference that carries significant implications for both compliance and market efficiency. Ohanae's focus on securities tokenization, underpinned by a permissioned blockchain, positions it as a transformative force in the non-Reg NMS market structure, delivering solutions to longstanding inefficiencies.
Understanding the Two Tokenization Models
Tokenization of Real-World Assets (RWA)
RWA tokenization involves creating digital tokens as representations of physical or tangible assets, such as real estate, commodities, or fine art. These tokens are traded on a blockchain as proxies for the actual assets. While this approach introduces benefits like fractional ownership and global accessibility, it also comes with significant risks:
- Off-Chain Dependencies: The token is only as reliable as its linkage to the off-chain asset. For example, a land title represented on-chain becomes invalid if the property is sold or mortgaged off-chain without proper reconciliation.
- Regulatory Uncertainty: The dual system of off-chain assets and on-chain tokens creates legal ambiguities regarding ownership, rights, and enforceability.
Tokenization of Securities
Securities tokenization, on the other hand, involves encoding ownership of equity, debt, or other financial instruments directly onto the blockchain. Unlike RWA tokenization, there is no "digital twin"; the blockchain record itself is the single source of truth, ensuring alignment between the asset and its representation.
Ohanae specializes in securities tokenization under the Delaware General Corporate Law (DGCL), which explicitly permits capitalization tables to be maintained on a blockchain. This ensures:
- Immutable Ownership Records: The blockchain reflects the definitive record of security ownership.
- Streamlined Compliance: Built-in adherence to regulatory requirements for securities transactions.
Why Permissioned Blockchain Is Critical for Securities Tokenization
In the context of digital asset securities, a permissioned blockchain offers unmatched advantages, particularly under the SEC's Special Purpose Broker-Dealer (SPBD) framework.
Regulatory Compliance and Custody
SPBD guidelines require strict control and custody of digital asset securities. Permissioned blockchains provide:
- Controlled Access: Only KYC-verified participants can transact, ensuring compliance with investor verification requirements.
- Transparency: Every transaction is logged immutably, providing an audit trail for regulators and stakeholders.
Security and Risk Mitigation
Permissioned blockchains prevent unauthorized access and minimize risks such as fraud, theft, or unauthorized asset transfers—risks amplified in public blockchain environments.
Alignment with SEC Oversight
Unlike public blockchains, where governance is often decentralized and unpredictable, permissioned blockchains allow for centralized control to enforce regulatory policies.
Ohanae's permissioned blockchain infrastructure directly addresses these regulatory needs while ensuring efficiency, security, and scalability for securities trading.
The Ohanae Platform: Solving OTC Market Inefficiencies
Problems in Traditional OTC Markets
Traditional over-the-counter (OTC) markets are fraught with:
- Inefficiencies: Manual processes and multiple intermediaries slow down transactions.
- High Costs: Brokers and clearinghouses add significant fees.
- Counterparty Risks: Lack of trust between parties creates uncertainties in settlement.
Ohanae's Solution
Ohanae was built to eliminate these inefficiencies, offering a secure, affordable, and direct platform for securities trading.
- Tokenization of Securities and Cash: Ohanae transforms securities into equity tokens and fiat into deposit coins (OUSD), creating a unified digital marketplace.
- Blockchain-Based Instant Settlement: Transactions are settled immediately on the blockchain, eliminating counterparty risks.
- Automated Market Making (AMM): Continuous liquidity ensures fair pricing and trading efficiency.
Designed for the Non-Reg NMS Market
The non-Reg NMS market structure, encompassing securities exempt from Regulation NMS, benefits from Ohanae's innovative approach. By tokenizing Reg A+ securities, Ohanae unlocks secondary market liquidity for public exempt offerings, enabling seamless trading.
Looking ahead, the platform is designed to scale for Reg NMS securities once compliance with public securities regulations is achieved, demonstrating its adaptability and vision.
Confidence. That's Ohanae.
Ohanae's commitment to permissioned blockchain technology and securities tokenization marks a paradigm shift in the OTC markets:
- Transparency and Efficiency: Removing intermediaries, automating processes, and ensuring direct issuer-to-investor connections.
- Investor Protection: Robust compliance mechanisms, KYC-verification, and secure custody under SPBD guidelines.
- Market Accessibility: Democratizing investment opportunities through equity crowdfunding and streamlined trading.
By addressing the limitations of traditional OTC markets and the risks inherent in RWA tokenization, Ohanae leads the charge in creating a secure, efficient, and transformative marketplace for the future of securities trading.
Join us in shaping the future of capital markets. Learn more at www.ohanae.com.
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.