Openfinance warns that it will eliminate all commission-free security tokens

The Openfinance security token trading platform is threatening to eliminate all tokens and suspend trading next month unless issuers make new funds available to cover its costs.

A request for responsibility to investors

The company did not see the trend of transactions on its platform growing rapidly enough to cover operating costs, according to an email sent to users of the alternative trading system (ATS) and shared with the media last Wednesday.

The email asks the token issuers listed on the site to cover these costs with new contracts. If no new commissions are paid, the company will eliminate all existing tokens on May 21 and will also stop trading on reliable platforms such as Bitcoin System.

Non-tokenized securities will continue to be negotiated, it is written in the email, although it is unclear how many traditional instruments are actually listed by Openfinance.

"We asked issuers currently listed on the platform to renew their listing agreements and to cover part of our costs, also through annual listing fees, as is common practice in large public markets, where issuers pay exchanges for listing services, ”says the email.

The Openfinance framework

Openfinance launched its ATS in August 2018, allowing accredited investors in the United States and investors outside the country to trade and purchase security tokens.

Tokens listed on Openfinance include, or at some point included, Blockchain Capital's BCAP token, SPiCE, Current Media's CRNC token, Lottery.com's LDCC token, and Protos' PRTS. Openfinance should also list the NBA guard Spencer Dinwiddie's personal token when it launches.

Openfinance has collected over three rounds from Sharpe Ventures, M25 and Huobi, according to Crunchbase. The latest of these saw the company raise $ 8.6 million.

A measure that protects investors

Kyle Sonlin, CEO of Security Token Market, said that if Openfinance closed its security token platform it would be "a loss to the industry", particularly in the United States.

"It is worth noting, however, that these security tokens can simply be self-guarded and ultimately transferred to another platform, testifying to the functionality and efficiency of the security token technology," he said.

The securities themselves would not suffer any interruption of ownership, says the Openfinance email. However, the issuers and their transfer agents will keep the property records. Users can also keep tokenized records in their digital wallets.

The email indicates that users could transfer security tokens directly to buyers and sellers. User funds will be held at Evolve Bank, an institution insured by the FDIC in West Memphis, Arkansas.

"We remain confident that existing listing agreements will be renewed and that any elimination can be avoided," says the email. "If this is not possible, we will work with our issuing partners to minimize any disruption and Openfinance will proceed, continuing to intensify efforts to improve the secondary market trading of digital (non-tokenized) securities on our ATS."