No pay, no play! Openfinance threatens to delist security tokens that refuse to pay fees.
The security token trading platform Openfinance is threatening to delist tokens unless issuers sign new contracts and pay additional fees. The platform will suspend trading next month if the conditions are not met.
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No Money, No Listing
"We have asked current issuers listed on the platform to renew their listing agreements and share in the costs, including an annual listing fee, which is common in major public markets where issuers are required to pay for listing services."
However, Openfinance emphasized in the email that ownership of these securities will not be affected. Issuers and their agents will still retain ownership records, and tokenized records in users' wallets will not be impacted. Additionally, the report noted that non-tokenized securities will continue to trade, but it is currently unclear how many traditional financial instruments Openfinance actually has.
Token Issuers
Openfinance launched its Alternative Trading System (ATS) in August 2018, allowing qualified U.S. domestic investors and overseas investors to trade and purchase security tokens. According to Crunchbase data, Openfinance has raised three rounds of funding from Sharpe Ventures, M25, and Huobi, raising $8.6 million in its last funding round.
Security token issuers expected to be affected include Blockchain Capital's BCAP, SPiCE, Current Media's CRNC, Lottery.com's LDCC, and Protos' PRTS.
Kyle Sonlin, CEO of Security Token Market, stated in an interview that the closure of Openfinance's security token trading platform would cause significant losses to the industry, especially in the U.S. However, Sonlin emphasized that this does not mean these token issuers have no recourse:
"It is worth noting that these security tokens can temporarily self-custody and be transferred to another platform later, which proves the functionality and efficiency of security token technology."
In fact, Openfinance is not so stringent, as the company expressed in the email that they still hope existing issuers can renew and avoid delisting if possible. However, if necessary, the company will still work with issuers to minimize the potential impact. Openfinance stated:
"Openfinance will continue to move forward, intensify efforts, and improve the secondary market trading of digital (non-tokenized) securities on our ATS."
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