Blockchain Firm Globacap to Sell Digital Equity Securities from FCA Sandbox

London firm Globacap plans to become the first company to issue equity securities via a public Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term with approval from the Financial Conduct Authority, the UK's financial watchdog. It will begin by selling its own securities.

Background

An equity security is a financial holding with monetary value that represents some kind of ownership share in a given entity (as opposed to a debt security, which represents money that is to be repaid).

Globacap wants to use blockchain technology to allow small and medium-sized businesses to sell shares to investors around the world. It is aiming for this market because it accounts for 67 percent of all private sector employment, according to the press release.

Investors are wary of the ICOs of certain SMEs because they are not regulated; according to its official introductory video, Globacap is solving this problem with a new financial instrument called a 'digital equity security.'

These are tokens which form a "legal shareholding within UK company and securities law." According to the press release, Globacap has worked with legal advisors to ensure legality. This means that investors and businesses must fully register with the company

It works with the FCA, so it "guarantees full Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term."

Sandbox

The company opens its doors in five days time with a fundraising drive for itself, which will also function as a test. It will be working within the confines of the FCA's sandbox.

A sandbox is a kind of quarantine in which companies can test their products without worrying about adversely affecting the economy or inadvertently breaking the law. The FCA has been running a sandbox since June 2016. Its latest six-monthly induction is called 'cohort four', and it has received applications from 69 companies, with 40 percent of them using blockchain in some way, according to Mortgage Finance Gazette.

Globacap will be selling its own equity in the form of a crypto-token. The digital security offering is meant to ensure that investors receive a return for their money, which is often not the case with unregulated ICOs.

Token sale

It will be selling 15 million GCAP tokens, which will function as regular shares do.

Myles Milston, Globacap CEO, said: "This is transformative to the securities industry, paving the way for small and mid-sized businesses to more efficiently access a wider pool of global capital. The Innovate team at the FCA have been pivotal in this milestone, allowing us a quicker route to launch our proof of concept while having regulatory oversight.”