Securitize, the blockchain startup backed by Santander, Nomura, MUFG, SBI, and Sony Financial Ventures, has acquired Pacific Stock Transfer which deals with conventional stocks. As a security token company, Securitize was founded to digitize the recordkeeping for stock holdings as digital assets and registered as a stock transfer company in 2019.
So the question is, why is the startup buying an old-school stock transfer company? The answer is the 3,000 publicly and privately traded clients that use Pacific Stock Transfer services. In contrast, Securitize has 200 companies that have issued security tokens through its platform. In one leap, Securitize became a top ten stock transfer company in the United States. And it can offer its newly acquired clients the option to tokenize their stocks.
Securitize already provides an end-to-end service. Its platform enabled primary market security token issuance from the early days. In 2020 it acquired DTM, the FINRA registered alternative trading system (ATS), which enabled the company to launch secondary market trading.
“From creating shares to tracking ownership to voting, tax, reporting and more, we do all the heavy lifting that enables businesses and shareholders to own and trade stocks,” said Billy Miller, COO of Pacific Stock Transfer, who will lead the business at Securitize. “Pacific Stock Transfer has already made this process more efficient for our clients through our DTC / Fast Automated Securities Transfer service, and integration with blockchain-based recordkeeping will enable us to provide significantly better and more efficient service to our clients and their shareholders in the future.”
Pacific Stock Transfer services 750,000 shareholders, which is also a big bump when added to Securitize’s figure of 450,000 investor accounts.
The question everyone is asking is, when will security tokens take off in a big way? Societe Generale saw a turning point in client adoption in 2021. Now that SIX launched its SIX Digital Exchange (SDX), there’s a stock market involved. But talking to many capital markets incumbents, they believe 2023 is the more likely timeframe. That’s in part because of Europe’s DLT sandbox, which will allow regulated digital assets from 2023.