Harbor offers a platform to firms and other types of businesses to allow them to issue their own tokenized securities. Their efforts are supported with big investors, like Andreessen Horowitz and Pantera Capital, and they are able to provide cryptocurrency that acts similar to Bitcoin. The blockchain technology that supports it is a way for the consumers of the third-party entities to “own” the assets that they buy. To improve their tokenization platform, Harbor has collaborated with BitGo.
BitGo is a crypto custodian, and their partnership with Harbor will offer storage solutions to the entities, making it possible to store cryptocurrency, once a token offering is posted on the Harbor platform. They only recently were approved by the South Dakota Division of Banking to be considered a qualified custodian, which is something that investors look for in custody banks. Both Gemini and Coinbase have this classification as well.
Harbor CEO Josh Stein commented, “Most of the people that are coming to raise capital on Harbor are institutional-grade folks. In the same way you want to keep your money in a bank account and not shoved under your mattress, institutions want to make sure their funds are secured.”
Other security token platforms are still trying to be every single thing to their customers, but Stein believes that using a third-party custodian to do the expert work lets firms focus on their product instead of the small details.
Recent research with The Block showed that security tokens helps to reduce the issues that U.S. stocks currently face, because they reside on the blockchain and are operated with distributed miners and nodes. Even without the functioning of a miner or node, the blockchain does not lose functionality. Without centralization, transferring and settlement of every security comes with better reliability and less risk.
However, due to the longevity of the traditional market, there are plenty of investors that are still apprehensive and even doubtful that blockchain could make a difference with capital markets. President Chris Concannon of Cboe Global Markets commented that he does not believe that blockchain will be “impacting the most liquid assets that we trade.”
In the meant time, Harbor is working on the private markets. Assets in this market do not have the same demand for liquidity that big stocks do, like Apple.
Stein commented, “Tokenization of private securities can bring liquidity to trillions of dollars of traditionally illiquid assets. It will not have the same liquidity as public markets but bringing some levels of liquidity can unlock tremendous value for both asset owners and their investors.”