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On September 16th 2019, Harbor announced a deal with iCap Equity to tokenize $100 million worth of real estate funds on Ethereum. Notably, the deal exhibits a pivot by Harbor, with a different means to achieve its same vision.
Harbor originally had the goal of helping companies issue security tokens.
Now, they’ve adjusted their path to assist companies with the tokenization of existing securities.
The San Francisco-based firm just announced a deal with iCap Equity. It features private securities, 1,100 investors, 17 broker-dealers, 17 placement agents, and four real estate funds worth a total of $100 million.
Those funds will now be tokenized on the Ethereum blockchain, where the funds’ ownership will be represented via security tokens.
Harbor’s transition from helping clients raise funds by selling security tokens to bringing liquidity to existing securities through tokenization is precisely what iCap Equity has been waiting for. According to its CEO Chris Christensen,
“For years, we’ve been looking for ways to create the best investment experience we can and for us that means providing liquidity for them.”
Traditionally, iCap’s investors have to commit to a multi-year lock-up period. If these investors wanted out of their investment prior to the expiration of its lock-up, they would have to find another investor who would take it over— a lengthy and costly process.
But with Harbor and its platform, the process will be different. Christensen says,
“What Harbor does is they automate this entire process. Those who want to come in come in, those who want to exit can do that.”
Harbor does this by establishing a private marketplace platform for its clients’ investors and broker-dealers to trade security tokens.
Harbor CEO Josh Stein added,
“It’s never going to be like a public market, but we can take something that’s illiquid or semi-liquid and make it more liquid.”
Stein says that these securities can even reach non-accredited investors. Rule 144 of the Securities Exchange Act of 1934 requires a minimum one-year lock-up period for securities sold. After that, they’re freely tradable.
According to Stein,
“I don’t think it’s a goal but what it says to these broker-dealers and RIAs [is] that they have this investment … they can get their non-accredited clients into it.”
Nearly $1 billion has been raised so far through the benefits of security tokens, with Harbor CEO Josh Stein previously saying that even professional sports teams have expressed interest in tokenizing team ownership.
What do you think of Harbor working with iCap Equity to tokenize $100 million worth of real estate on Ethereum? Let us know what you think in the comments section below.
Image courtesy of Harbor.