Digital security manager Securitize, a blockchain-based transfer agent, has delivered a royalty payout to holders of one of its issuer’s security tokens — a company first.
Distributing a “royalty payment” to holders of Lottery.com security tokens Friday, Securitize claims it has become the first registered securities record keeper, a transfer agent that also disburses token-holder payments entirely on a blockchain. Securitize declined to disclose how much in royalty payments it had distributed.
Transfer agents maintain and update securities ownership records as well as distribute payments, like shareholder dividends or interest (in Lottery.com’s case, a portion of raffle revenue) to owners. But transfer agents aren’t always “paying agents,” the ones actually delivering those payments to shareholders, as Securitize essentially says it has become.
Carlos Domingo, CEO of Securitize, told CoinDesk his smart contract-based payout system is the “future” of shareholder payout disbursements. “With this we can basically do instant payouts,” he said, because the token ownership records update in real time and can integrate right with the means to deliver the payouts.
“It’s a combination of the two advantages of security tokens that make these processes much more efficient than the traditional way of doing it,” he said.
Domingo pointed to the stock market’s costly-on-the-margins disbursement schemes that he claimed allow transfer agents like Computershare to profit off the dividends they’re meant to deliver. Such inefficiencies are impossible in Securitize’s model, he said.
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In disbursing the Lottery.com payout, Securitize found more than half of the tokenholders elected to receive their payouts in the stablecoin USDC. This made “the whole process much more efficient and streamlined than sending an ACH, a wire or a bank transfer,” Domingo said.
Securitize is looking to bring its royalty disbursement service to the company’s real estate partners next, Domingo said.
Securitize is one of a handful of crypto-focused transfer agents registered with the Securities and Exchange Commission, along with Harbor (later acquired by BitGo) and TokenSoft.