Digital securities company Akemona has become the first company to be regulated by the US Securities and Exchange Commission (SEC) for a smart contract-based funding portal built on blockchain technology.
Regulated under section 3(h) of the Securities Exchange Act, which handles what is known as regulation crowdfunding, Akemona has developed a platform that enables small businesses to borrow directly from investors through a bond, using a blockchain-based smart contract.
Founded in 2018 by a group of former Fortune 500 executives, the company has developed the platform to combat current inefficiencies in capital markets, particularly around the time it takes for traditional securities to go through post-trade processes. At present, this typically takes 2 days, but Akemona’s platform will enable the process to be completed immediately.
“Digital Securities can be traded 24×7 and are settled immediately, providing full transparency of trade and pricing,” said Akemona founding partner Ravi Srivastava.
Having received regulatory approval, Akemona will continue with its ongoing beta test phase, and will launch its platform by the end of 2020.
Akemona harnesses blockchain to bring smart contracts to digital securities
Underpinning Akemona’s system is a software token known as aPledge, which according to CTO Brady Matthrews, represents “investment commitments as well as digital securities”.
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“Underlying an aPledge is a smart contract, which is a self-executing software containing the terms of the agreement between buyer and seller,” he explained.
“This agreement is immutable and resides on a decentralised blockchain network. All transactions executed by the smart contract are visible on the blockchain, which allows full auditability of transactions by any third-party.”
This regulatory approval also represents a key step in the growing acceptance of blockchain technologies across the world of finance.
One considered an outsider technology, blockchain is increasingly being embraced by mainstream institutions within the financial world, with JP Morgan among those embracing the potential of the technology.