The social crypto trading platform Blockport plans to launch a multi-stage security token offering (STO) starting in March 2019, with the goal to raise at least 15 million EUR for company expansion. STO Funds are earmarked for establishing operations in the U.S. and other countries, expanding its social brand in the European retail market and acquiring licensing for fiat-to-crypto banking services following increased user growth in 2018.
Slated on Tokeny security token issuance platform, the Blockport STO will include separate offerings to (i) accredited investors in the United States and (ii) to participants in Europe and other jurisdictions.
According to Amsterdam-based Blockport, that platform has “big goals” for expansion in 2019, following paying-user conversion rates exceeding that of Coinbase’s by four to five times in the previous year. Not only did Blockport report a successful beta launch 2018, the platform generated an interest in the U.S. during 2018: the US accounts for 40 percent of Blockport’s web traffic. In order to enter the U.S. market, however, Blockport said that it would require significant resources for securing the proper licensing.
The team chose an STO to fund its expansion plans due to its belief in cryptocurrency as the foundation of innovation in global finance. In fact, this STO isn’t Blockport’s first token offering. The company held a successful utility token sale in 2018 called Blockport Token (BPT) to help fund development for the crypto exchange.
Scheduled for March 2019, the first round of the offering has set a goal of raising 5 million EUR in the European Economic Area and the United States. Blockport intends to leverage an exemption from the requirement of publishing an approved prospectus for the first round. Shortly after the first round concludes, Blockport has planned a second round of fundraising. Blockport intends to engage in concurrent offerings in the United States under Rule 506(c) under Regulation D under the United States Securities Act of 1933 (Securities Act) to accredited investors and a separate offering under Regulation S under the Securities Act to investors in Europe and other countries.
Blockport aims to bring the total amount raised to 15 million EUR by the end of the second round in June. A third round of the STO is also planned, but the timing and structure will depend on Blockport’s growth in 2019 as well as overall market conditions. In total, with all three rounds combined, the crypto exchange aims to raise 30 million EUR.
Participants in the STO will receive Blockport Securities (BPS). Each security token represents a ‘depositary receipt’ or ‘certificate’ for a corresponding share and, thereby, an (indirect) ownership stake in Blockport, entitling holders to the dividends paid out on the underlying share if and when they are declared. These tokens will not, however, give holders voting rights, as these vest with the intermediary issuing the BPS’s who also acts as legal owner and administrator of the underlying shares in Blockport.
Since the launch of its user-friendly trading platform in August 2018, Blockport said that it had seen paid user conversion four to five times higher than Coinbase. Crowdfund Insider reached out to Blockport Founders Sebastiaan Lichter and Kai Bennink via email to learn more about the team’s goal, the platform’s launch and its plans for the sector.
Crowdfund Insider: On the cutting edge on fintech & crypto, how does Blockport see itself leading and/or contributing to the sector?
Sebastiaan Lichter: When we started with Blockport in 2017 we identified some crucial challenges that the whole ecosystem still faces to date. These have to do with the lack of usability, liquidity, transparency, education and security.
Therefore, we’re the most user-friendly bridge between the traditional world of finance and decentralised digital economies.
One of our core plans is that Blockport will be built on a unique hybrid-decentralised architecture. This exchange architecture is based on a combination of both traditional centralised and new blockchain-driven decentralised components that leverage best of both worlds. It allows users to trade with the high-performance and usability of a centralised platform, but manage and store their assets in a safe and autonomous way, where they owns their own private keys.
We’re contributing to this industry by providing an extremely accessible and user-friendly solution that in parallel utilizes blockchain technology in a way that benefits consumers the most, which is secure storage of funds. Transparency, usability and security is what the industry’s been missing for mass adoption to take place and that’s exactly what we’re bringing to the table with Blockport.
CI: Where does the platform see potential failures and opportunity for success? How will Blockport address these concerns and potential issues?
Kai Bennink: We’ve identified five general challenges in this new industry and provide clear solutions to address them where others have been failing to provide a solution to offer everything in one package.
(1) Lack of Usability: The user-interface (UI) of current exchanges highly reflects that they are built for professional traders and tech-savvy consumers. Therefore, current solutions are still far too complex for the average user to understand and for mass adoption to take place.
Blockport built a user-friendly platform that takes users through every step, from on-boarding to making its first trade.
(2)Lack of Liquidity: This makes it harder to trade and results in higher investment costs due to not enough people buying and selling assets on existing exchanges. In the current market, liquidity is fragmented over multiple segmented market places, resulting in multiple illiquid smaller markets and making it harder for consumers to easily purchase digital currencies at desired prices.
Blockport is connected to external exchanges, effectively aggregating liquidity and offering this to our users. This way we can always offer the best prices in the market.
(3) Lack of Security: The highly liquid and most used exchanges are centralized exchanges that have ownership over their customers’ funds. These exchange models have unfortunately proven to be extremely susceptible to internal fraud and external hacking.
Eventually, we are building Blockport on a hybrid-decentralised architecture, as described in the previous answer.
The remaining two problems stated below impose non-technical barriers that limit people in trusting and using current exchanges and broker services.
(4) Lack of Transparency: Aside from hidden liquidity costs, exchanges and especially brokers are not always transparent about the actual commissions and fees that are associated with a trade. This results in an overall increase of mistrust from consumers in exchanges.
We address this issue by always communicating our fees and governance structures, so that users are never surprised or fooled.
(5) Lack of Education: Current solutions lack proper education and knowledge sharing functionalities that are necessary to help beginner investors get familiar with the new digital economy and stimulate the overall adoption of digital currencies as a valuable asset.
We facilitate a knowledge-sharing community through our uniquely designed social trading features. This allows users to follow and copy each other and share their portfolio, trading activities and insights.
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