Oasis Pro Integrates with Provenance Blockchain To Drive Adoption of Tokenized Real-World Assets
Oasis Pro’s suite of products provide critical infrastructure needed for regulated financial institutions to tokenize and manage financial products on-chain
NEW YORK / SAN FRANCISCO, Sept. 13, 2023 – Oasis Pro, a leading digital asset securities infrastructure provider enabling tokenization, transfer agent service, and broker-dealer / ATS (alternative trading system) services, today announced an integration with Provenance Blockchain, a leading decentralized blockchain purpose-built for financial services with over $8B in real-world financial asset total value locked (TVL).
The integration brings together two leading platforms to provide needed capabilities and optionality for financial institutions and fintechs seeking to tokenize and manage real-world financial assets utilizing blockchain technology. In recent months, financial institutions have increased tokenization efforts in an aim to enable greater efficiency and access to a variety of financial products, including investment funds, private equity, and debt. Research by Boston Consulting Group (BCG) suggests that the tokenization of global illiquid assets could reach $16 trillion by 2030.
As part of the integration, Oasis Pro will provide seamless accessibility to products including Oasis Pro Tokenization, Oasis Pro Transfer Agent, and Oasis Pro Markets – a full-service investment bank and a FINRA registered marketplace for digital asset securities.
“Having supported over $15B in real-world financial asset transactions, Provenance is the number one blockchain for institutions tokenizing real-world assets. Through our comprehensive offering and licenses, we provide a best-in-class complete solution for institutions and fintechs aiming to tokenize and manage the lifecycle of securities utilizing blockchain technology. We’re thrilled to collaborate with the Provenance Blockchain Foundation to educate and drive adoption of tokenization and blockchain technology.” said Pat LaVecchia, CEO of Oasis Pro.
“Oasis Pro is among the most capable, professional and innovative companies in the digital asset securities ecosystem” added Anthony Moro, Acting CEO of the Provenance Blockchain Foundation. “We’re excited to connect Oasis Pro’s broad range of products and services to financial institutions and fintechs looking to tokenize assets on Provenance Blockchain.”
Purpose-built exclusively for the financial services and insurance industry, Provenance Blockchain is routinely the blockchain of choice for tokenization and has played a key role in several financial services firsts, including the first blockchain-native consumer loans, first asset-backed securitization on blockchain, and the first bank-minted tokenized deposits in the U.S. Provenance Blockchain is leveraged by more than 70 leading financial institutions including Apollo Global Management, Hamilton Lane, and Guaranteed Rate, and innovative fintechs such as Figure.
Through the integration of Oasis Pro with Provenance Blockchain, regulated financial institutions now have a holistic destination to tokenize, manage, and scale digital asset securities on leading infrastructure built specifically for regulated financial services institutions. Those wishing to learn more can visit: Connect Oasis Pro
About Oasis Pro:
Oasis Pro is a global fintech infrastructure provider for real world assets and digital securities. Leveraging our deep wall street and blockchain expertise we guide traditional financial institutions and sophisticated investors in the evolution of alternative asset investing. Oasis Pro provides a holistic multi-asset trading platform solution for both public and private tokenized securities using digital cash or fiat. Oasis Pro’s subsidiary, Oasis Pro Markets, is a FINRA member firm that operates a multi-asset alternative trading system (ATS), OATSPRO, to allow primary issuance and trading of public and private multi-asset digital securities as well as a full-service investment bank. Learn more at www.oasispromarkets.com. Securities are offered through Oasis Pro Markets, Member FINRA/SIPC.
About Provenance Blockchain:
Provenance Blockchain is modernizing financial services with an open source, public blockchain that is purpose-built and properly permissioned. The leader powering financial services with over $8B in real-world financial asset value locked (TVL) and over $15B in supported financial transactions, Provenance Blockchain is leveraged by more than 70 leading firms, from the largest banks and asset managers to the most innovative emerging fintechs. Provenance Blockchain enables regulated financial service firms of all sizes to seamlessly and securely deploy and manage the full lifecycle of digitally-native financial assets at scale with interoperability on blockchain technology. Founded in 2018, Provenance Blockchain is a complete blockchain solution optimized for compliance and built with Cosmos SDKs and IBC integration. The native utility token, HASH, is used to pay transaction fees and enable governance. Please visit Provenance Blockchain at Provenance.io and follow us on Twitter @provenancefdn and on LinkedIn.
Oasis Pro Inc. is the parent company of Oasis Pro Markets LLC, a registered broker-dealer and member of FINRA and SIPC. Nothing contained in this newsletter constitutes a recommendation or an offer, or solicitation of an offer, to buy or sell any security or investment product.
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ESG – Required/Desired Unmentionables
According to a recent Bloomberg survey:
About two-thirds of respondents in a survey of roughly 300 Bloomberg terminal users said the anti-ESG movement that started in the US last year will force firms to stop using those three letters in conversations with clients. However, they’ll continue to incorporate environmental, social and governance metrics in their business, they also said.
And the market reflects the controversy with corporate dollar denominated ESG bond sales declined from $91 billion in 2021 to $30 billion in 2023.
In addition, ESG isn’t highly ranked in importance:
Some 85% of respondents who identified themselves as being engaged with ESG said financial performance is the most important factor to consider when investing. Only 39% said the same of ESG, which was the lowest reading in the survey.
On the flip side, Bloomberg also reports that Morgan Stanley, the 7th largest underwriter of ESG debt, reports a decent pipeline growing stronger into 2024 and BNP Paribas, the largest underwriter, is predicting a banner year.
So why continue to incorporate ESG when you can mention it and don’t think highly of the concept and why the divergence in between “decent pipeline” and “banner year”?
The answer is a mix of increasing demand for ESG investments with faster growth outside of the US and regulatory requirements. While the GOP is making ESG a four-letter word in the US, the EU is strengthening ESG requirements including verification of ESG validity and compliance. The SEC is also increasing scrutiny of ESG claims.
So, the current situation:
- Many investors, including major institutions, want ESG investments.
- EU and other non-US investment regulators are increasingly requiring ESG reporting and in some cases requiring some level of ESG investment.
- US and other regulators are cracking down on “greenwashing” i.e. falsely claiming ESG compliance.
- US will fall behind EU and other countries in requiring, originating, and regulating ESG investments.
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ESG Lawsuits
According to GreenBiz: ” Lawsuits involving ESG-related issues have increased by 25 percent over the past three decades, according to research published earlier this year by the World Business Council for Sustainable Development (WBCSD)…..
Broadridge, a fintech company, also highlights regulator crackdowns on greenwashing and an increase in event-driven securities litigation — where lawsuits are filed over significant events that impact a company’s share price — as drivers of ESG-related securities and class action lawsuits…..
One well-documented impact of ESG-related lawsuits is the trend of “greenhushing,” where companies under-communicate their sustainability activities to avoid greenwashing accusations or political attacks. With regulatory agencies such as the Securities and Exchange Commission and the Federal Trade Commission taking action against corporations for misleading claims about corporate and product sustainability claims, the fallout related to greenwashing has expanded from reputational risk to compliance risk….
And this is before or in the initial stages of the “SEC’s planned climate-related disclosures rule and the EU’s Corporate Sustainability Reporting Directive…”
This doesn’t include Republican attacks on ESG or on any socially responsible investment criteria (investment managers are supposed to focus on profits, clients choking to death on discharges from their profitable investments are not investment relevant). Nor the reputational (as opposed to legal) risk of companies and investment managers claiming to be “ESG conscious” while investing in oil, or other non-green or anti-green sectors (just ask BlackRock’s Larry Fink defending ESG and then BlackRock appoints the CEO of Aramco to its board (BlackRock Appoints CEO of Oil Giant Aramco to Its Board – Bloomberg).
The full article can be found at: Get ready for more ESG lawsuits | Greenbiz
Advice can be obtained from our strategic partners. Feel free to contact us for introductions.
MSCI Real Assets has published its July 2023 “MSCI Real Estate Market Size”
The size of the professionally managed global real estate investment market declined to USD
13.3 trillion in 2022 from USD 13.9 trillion in 2021, primarily driven by macroeconomic factors such as rising inflation and increasing interest rates.
On the back of a strong dollar and a slowdown in other markets, especially Europe, the weight of the U.S. in the global market size continued to grow, reaching 40.3% in 2022.
The top five markets constituted 66.9% of the global market size, up from 65.6% in 2021.
Japan overtook the UK to become the third-largest market while China placed second and Germany fifth.
A copy of the report can be downloaded at https://info.msci.com/l/36252/2023-07-18/xzqn2g?utm_source=msci_real_assets&utm_medium=email&utm_content=2023_market_size_ra&utm_campaign=ra_total_portfolio.
U.S. Regulation of Digital Assets – Who?
Confused as to what is a digital asset and which U.S. government agency has jurisdiction? The Tokenizer has a good overview at https://thetokenizer.io/2023/06/06/regulation-of-digital-assets-in-the-united-states-of-america/.
Digital assets are either a security regulated by the SEC, or a commodity regulated by the CFTC, or a currency regulated by Office of the Comptroller of the Currency. But on the other hand, maybe not.
Tokens may be utility tokens for consumption and not a security token for investment. Or a mix of the two – think timeshare tokens that are for your use (consumption) but may be sold for a profit (investment).
Digital asset markets may be an exchange subject to SEC regulation or a money-transfer-service subject to State regulation.
But in any case, FinCEN regulates KYC (Know-Your-Client) and AML (Anti-Money Laundering) and the IRS considers all digital assets “property” not “currency” and therefore subject to tax including capital gains – unless it isn’t.
Hope that helped. If not, reach out and we can discuss.
Digitalized Tokenized Real Estate Part 2
Why Digitalize?
- Automatesdocument retrieval and data entry.
- Trusted Data improves asset values and liquidity.
- Deliver current pricing and performance data at greater speed, lower cost, and more frequency.
- Dramatically reduce cost and friction of asset valuations and due diligence time.
- Eliminate duplication of efforts to value and audit assets.
Data is stored in one trusted database automatically (as authorized) providing information to investors, lenders, service providers such as accountants, and third-party valuators who can provide updated opinions of value (optional).
Why Tokenize?
- Management – tokens are electronic versions of documents combined with smart contracts to define and automate an offering and associated workflow. The smart contract defines what happens upon the occurrence of an event. For example, the digitalization component reports share sales and distribution. The smart contract transfers ownership of the shares, calculates and makes the distribution, updates the capital table, and stores the information on an auditable, unalterable blockchain with all information available via a secure online portal.
- Flexibility – smart contracts allow for complex structures. Cash flows can be allocated in various configurations: to senior lenders, to mezzanine, to preferred equity, to general partners and limited partners – with automatic, instantaneous waterfall calculations and capital account adjustments. Actions dictated by the smart contracts embedded in the token could also be non-financial, for example management of timeshare units or club memberships.
- Liquidity – Currently real estate is an illiquid asset, localized, with high due diligence and transactional costs – especially on the trading of limited interests. Digitalization provides the necessary information and Tokenization opens the investment to the world as a tradeable instrument – in conformance with SEC and other legal regulation.
The sponsor could stop here with a cost and operationally efficient investor relations platform or continue to a listing on an Alternative Trading System to raise capital and allow the investors to actively trade a previously illiquid asset.
Benefits of Digitalization + Tokenization + Alternative Trading Systems:
- Fractionalization – smaller investment amounts accessing more investors.
- Globalization – cross-border real estate finance is complicated and requires significant investment in understanding local law and practices – security tokens regulation is handled by the issuer and the tokens can be listed on multiple markets or sold to investors outside of the listing market (subject to legal requirements) thus opening investments to any investor with internet access.
- Ease of Information – due diligence/investment information is available online.
- Ease of Investment – investors trade tokens similar to trading stocks & bonds.
- Institutional Trading – institutional trading desks accept lower yields/higher prices in return for easy access to reliable due diligence information and the ability to trade electronically on a regulated market.
Digitalized Tokenized Real Estate
From accountants creating country club partnerships to Master Limited Partnerships, Private REITs, Public REITs, TICs, DSTs, LLCs – the real estate industry has always pursued new, more efficient, more effective ways to raise funds and diversify risk. Digitalization and Tokenization are the next steps in increasing efficiency, expanding the potential small and institutional investor base, opening investment globally, and providing liquidity for what has historically been an illiquid asset.
Digitalization is the creation of a digitally recorded investment such as proof of ownership of or participation in an asset (for example a limited partnership interest in a property) which is recorded electronically on an unalterable blockchain instead of on paper in a filing cabinet. Digitalization can be expanded to include real or near real-time updates of investment performance, valuations, and other data items needed to enhance the liquidity of the asset.
Tokenization is the expression of the digital asset which can be administered electronically and automatically via smart contracts (short blocks of code) embedded in the token. The tokens can be traded privately (subject to SEC regulations) or be issued as a registered security and traded on an Alternative Trading System (ATS) providing access to individual and institutional investors on a global basis and secondary trading of previously illiquid investments.
The World Economic Forum estimates a potential $24 trillion in tokens by 2027. The Boston Consulting Group is more conservative at only $16 trillion by 2030.
What does this mean in plain English?
In brief, information on the property or other investment is onboarded and updated on a permissioned blockchain. This provides for the information to be memorialized so it can’t be changed, linked to the underlying source for validation, and feeds into smart contracts that can automatically perform pre-programmed functions. Capital tables, distributions, etc. are automated and viewable by investors online through a secure website portal. Audit trails are established and maintained.
The investors purchase tokens – basically think of them like shares – which they can trade on the ATS similar to trading stocks and bonds rather than the current reselling of real estate shares to specialist buyers with the typical limited market, discount price, extensive paperwork, and lengthy time for buyer’s underwriting and legal.
Investors log on to the ATS, review the documentation, decide to buy, click the button, transfer done – all with institutional grade legal, documentation, valuation, and implementation.
Issuers have the option to add components providing:
- ESG/Environmental reviews.
- Updated property performance information (potentially real-time).
- Property valuations on a periodic or as-needed basis.
In short: real-time online information, updated valuations, automated record keeping, transparency = reduced workload, enhanced investor relations, access to institutional investors, lower costs, and higher values.
Contact me if interested in additional information on digitalizing real estate on a SEC registered broker/dealer.
Real Estate Markets – Not Even Close Enough to Haggle
Participated this morning in the monthly Columbia Business School RE Circle, the Paul Milstein Center for Real Estate International Real Estate Alumni Meeting: Updates on RE Markets Around the World.
Participants confirmed my opinions that:
Sellers are looking for 4-4.5 caps and buyers looking for 5-5.5 caps – indicating a 20% decline in value and too far apart to even haggle.
Funds that were lending at 8% and leveraging up with an A-piece from a bank can’t cause banks now charging 8%.
Lots of money sitting on the sidelines and more funds being raised with nowhere to go.
Equity funds raising money for debt funds to play lower down on the LTV.
Only asset class that’s optimistic is single family.
Values down 20% and market won’t start clearing for 6 months or so.
Banks/Special Servicers will cooperate to avoid a panic.
Mezz/Pref Equity that’s really Equity + Hope Note is the future.
White Knight Pref Equity To The Rescue
What is White Knight Pref Equity?
White Knight Pref Equity is the investment of new funds into a capital stack by a friendly investor to solve a refinance or other shortfall. It is the opposite of bottom-fishing or vulture investing or loan-to-own.
How does it work?
Say for example you have a property where changes in cap rates and LTVs leaves your refinancing short by $10 million, the White Knight Pref Equity funds the gap.
Why be a White Knight?
For example, a pension fund real estate investor that I work with had a problem. They buy or JV on existing and to-be-built low/mid-rise residential rental properties and BTR projects. The market for that product is extreme competitive and even paying market rates, they kept losing deals to other buyers – even at the same price. Last to play golf with the broker got the deal.
Their solution – offer favorable terms for White Knight Pref Equity in return for a Right of First Refusal. The property owner receives favorable, even below market funding, The lender receives an acceptable rate of return and is first at the table in the event of a sale.
A win-win.
Languages Lost to Climate Change
One of the lesser-known impacts of Climate Change is the loss of already threatened indigenous languages.”
Since 1950, the number of unique languages spoken throughout our world has steadily declined. Today, the voices of more than 7,000 languages resound across our planet every moment, but about 2,900 or 41% are endangered. At current rates, about 90% of all languages will become extinct in the next 100 years.
According to The Language Conservancy.
And potentially the most affected by climate change are the languages of Asia and the Pacific Islands with few surviving speakers.
Disasters, the majority of them weather related, accounted for 23.7m internal displacements in 2021, up from 18.8m in 2018. Over the past 10 years, Asia and the Pacific were the regions most affected by displacement worldwide, with the Pacific island states the worst by population size.
According to The Guardian.
Drawing attention to the issue, the UN declared Year of Indigenous Languages.
The Language Conservancy provides additional information on the danger and attempts to save endangered languages.
