Harbor, a San Francisco-based company looking to use blockchain to power crypto-securities compliance, has raised $10m.
The financing was led by Vy Capital, Fifth Wall Ventures and Valor Equity Partners, having been previously incubated by the new firm Craft Ventures. With ICOs face increasing scrutiny from regulators, Harbor’s is looking to power the future of crypto-securities by building a decentralized compliance protocol that standardises the way securities are issued and traded on blockchains.
The U.S. Securities Exchange Commission has recently warned that many ICOs may ultimately be classified as securities and has already taken action against several firms for violations.
Earlier this month, the SEC put the brakes on an initial coin offering (ICO) that was seeking to raise up to $1bn to develop ‘the world’s first decentralized bank’. The regulator also recently filed charges against two organisers of a $15m ICO.
“Blockchains have revolutionary potential to improve liquidity and transparency for private securities, but regulatory compliance remains a significant roadblock,” said Bob Remeika, Harbor co-founder and CTO. “We created Harbor to deliver critical compliance infrastructure needed for crypto-securities. The Harbor protocol will allow issuers to play by existing rules, enforcing compliance across all transactions and jurisdictions — from ICOs to secondary trades.”
While Blockchain has created the perfect ledger to transform the private securities market, liquidity is also bringing significant challenges to issuers and investors according to the company. Private securities must adhere to the regulations of governing jurisdictions, not only for the initial issuance, but for all secondary trades.
Harbor’s first project, The Regulated Token (R-Token), is an open source standard that applies regulatory compliance at the token level. The token embeds rules to ensure only eligible investors can trade the token. Issuers, broker dealers, underwriters, and/or regulatory bodies can implement the R-Token standard to meet jurisdictional securities regulations, know your customer (KYC) policies, anti-money laundering (AML) requirements, tax considerations, and more. The R-Token standard is a system of ERC-20 smart contracts built on the Ethereum blockchain and compatible with the ERC-20 ecosystem.
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