Securitize, a global solution for creating and managing compliant security tokens on the blockchain, announced today it has facilitated the first-ever investment into a security token offering (STO) from an individual retirement account (IRA).
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.
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.
“We are very excited to facilitate investing IRA funds directly into digital securities offerings. 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.”
– Carlos Domingo, Co-Founder and CEO at Securitize
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% per year over the next decade, a concern among investors chasing stronger returns, navigating inflation and reducing interest rate risk.
“We selected Securitize as our working partner for issuing security tokens because they are the leading solutions provider in this rapidly-growing space. 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.”
– Robert Nance, Managing Partner at CityBlock Capital
A recent Greenwich Associates study reinforces this notion. Pension funds, endowments, and other large investors have allocated $882 billion to liquid alternatives, while institutional investment into liquid alternative-themed 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.
“We are thrilled to power the first-ever direct investment in a digital security via an IRA. 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.”
– Eric Satz, CEO at AltoIRA
Securitize’s DS Protocol compliantly manages secondary trading and corporate actions for digital securities. It has the highest adoption rate in the industry with 12 digital securities currently issued. Five are currently trading on public marketplaces, with dozens more in the pipeline.