Security Token Offering (STO) Platform Leader Securitize, has executed the world’s first STO investment from an Individual Retirement Account (IRA).
“We are very excited to facilitate investing IRA funds directly into digital securities offerings,” said Carlos Domingo, Co-Founder and CEO at Securitize. “Issuers of digital securities will now have direct access to a new and massive source of capital connected to the Securitize platform, while IRA investors will have an opportunity to easily invest in deals they would typically not have access to.”
“We selected Securitize as our working partner for issuing security tokens because they are the leading solutions provider in this rapidly-growing space,” said Robert Nance, Managing Partner at CityBlock Capital. “The firm’s technology introduces us to significant, previously untapped liquidity while introducing IRA holders to the emerging companies reengineering our capital markets through blockchain technology.”
By directly integrating Securitize’s DS Protocol, AltoIRA, an automated and cost-effective process for investing IRA savings in alternative assets, has successfully facilitated the acquisition of security tokens issued by venture capital firm CityBlock Capital for its flagship private fund.
“We are thrilled to power the first-ever direct investment in a digital security via an IRA,” said Eric Satz, CEO at AltoIRA. “A truly diversified portfolio ideally allocates 10-20% to alternative assets. Yet, currently, only 2% of all alternative assets are held within IRAs and 401(k)s because their traditional custodians lack the digital infrastructure to expand beyond investments in public market securities. Alto is changing that. We bring alternative assets, such as private equity, venture capital, real estate and cryptocurrency, to the mainstream. Institutional investors have always had exposure to this space, now individuals have the opportunity to do the same directly from their retirement accounts.”
CityBlock’s NYCQ fund focuses on early-stage companies committed to improving tokenized finance and digital asset trading. Its digital security offering, also powered by Securitize’s issuance platform, accepts US dollars, Bitcoin, and Ethereum payments. AltoIRA’s digital investment platform also automates asset transfer between custodians and IRS reporting.
The announcement follows Morgan Stanley’s recent projection that a traditional investment profile with a 60/40 percent distribution between equities and bonds will return just 2.9 percent per year over the next decade, a concern among investors chasing stronger returns, navigating inflation and reducing interest rate risk.
“The return outlook over the next decade is sobering – investors face a lower and flatter frontier compared to prior decades,” stated Morgan Stanley in a Business Insider report. “Investors will need to accept much higher volatility to eke out small incremental units of return.”
Morgan Stanley’s analysts pointed to low growth prospects, weak inflation, and sliding yields as the primary drivers for muted returns.
“US equities expected returns are dragged down by a combination of lower-income return, low inflation expectations and penalties on both higher-than-average valuations and above-trend growth that cannot be sustained for the next decade,” the analysts added.
A recent Greenwich Associates study reinforces this notion. Pension funds, endowments and other large investors have allocated $882 billion to liquid alternative investments, while institutional investment into liquid alternative ETFs will rise from $47 billion to $114 billion over the next 12 months. Amid concerns of over-investment, liquidity risk and composition risk in ETFs, security tokens provide a new form of direct exposure to alternatives.
Securitize’s DS Protocol compliantly manages secondary trading and corporate actions for digital securities and has the highest adoption rate in the industry with 12 digital securities currently issued, five trading on public marketplaces, and dozens more in the pipeline. The Securitize compliance platform and protocol provide a full-stack solution for issuing and managing digital securities (security tokens). Securitize’s innovative DS Protocol has the highest adoption rate in the industry and enables seamless, fully compliant trading across multiple markets simultaneously. Multiple Securitize powered digital securities are already trading globally on public marketplaces with many more in the pipeline. For more information, please visit www.securitize.io.
AltoIRA gives consumers the ability to access and execute investments in alternative assets, such as private equity and VC funds, real estate, marketplace loans and cryptocurrency, using their retirement savings. Alto’s cost-effective and hassle-free technology platform streamlines the process for companies, funds, borrowers and investment platform partners to include IRA capital in their offerings. AltoIRA’s investment platform partners include AngelList, EquityZen, MasterWorks, Wefunder and more. Launched in 2018, the Nashville-based company provides investors with an opportunity to build diversified portfolios for retirement with tax-advantaged dollars. For more information, visit www.altoira.com.
CityBlock Capital is the first early-stage VC firm focused on merging traditional VC with the new investing ecosystem resulting from blockchain technology and harnessing its momentum. The firm’s “Last Mile” approach globally sources capital to invest in local startup ecosystems. For more information, please visit www.cityblockcapital.com.