Tokenization Platform Harbor Launches With $20 Million Luxury Dorm In South Carolina
Harbor, a startup that seeks to use blockchain to tokenize private securities, has launched its platform that makes it easy for companies to issue security tokens, the firm announced on Tuesday, November 26, 2018.
The Andreessen Horowitz-backed firm, in partnership with Convexity Properties, set the ball rolling with the sale of a $20 million mega dorm, part of a tokenized real estate in Columbia.
Blockchain and tokenization
Also backed by Pantera Capital and VY Capital among others, Harbor provides the platform on which mainstream companies can raise capital by issuing tokenized securities.
Security tokens are those that represent ownership in the given assets, which can be anything from real estate, rare art or private equity.
In an interview with The Block, Harbor CEO Josh Stein said that the dorm is their first offering, with many more expected in the coming days.
Stein said blockchain has allowed them to blend positives derived from the burgeoning crypto industry and standards in compliance that define the traditional securities market.
As such, he said, the firm can “at any given moment […] tell the issuer the exact person or entity who owns what and when.”
The capacity to be on top of things has the potential benefit of helping the firm prevent nefarious actors from exploiting the platform to engage in money laundering.
Users who wish to use Harbor can set up their accounts quickly and easily, which the firm says isn’t different from signing up for a brokerage account.
Harbor implements the know your customer (KYC) regulations as required under securities laws, which Stein said takes about 2-3 minutes before a new user moves on to the accredited investor verification.
Why is tokenization important?
Illiquidity is a problem in the investment markets, affecting the real estate and private equity among other assets. However, analysts have said that tokenization could help increase liquidity in markets involving these assets.
Illiquidity has an impact on the market, with such assets commanding prices that are mostly far less than their true worth. However, tokenization allows increased liquidity which can lead to wider access and higher prices.
That is what Harbor is targeting. Stein explained that the platform was “combining liquidity and access,” adding that the firm wants to see tokenization of private markets whose liquidity levels are far lower compared to big-cap stocks like FAANG.
“Tokenization of private securities can bring liquidity to trillions of dollars of traditionally illiquid assets.”
The Hub at Columbia
Only accredited investors are allowed to buy a stake in the mega-dorm, The Hub at Columbia – an institutional grade, off-campus housing unit at the University of South Carolina. The housing property is divided into 955 shares (tokens), with each token valued at $21,000.
Build in 1983 and redeveloped in 2014, the property is only 0.3 miles off the campus, with the 14-story complex comprising 260 apartment units designed to offer its users world-class amenities.
According to information on the firm’s website, such high-end amenities include a rooftop, resort-style pool on the roof, a hot tub, fitness center and a tanning salon among others.
According to Harbor chief executive, there is interest in the real estate deal that the firm rolled out a day after investors to purchase token shares. Once the purchase closes, the platform will proceed to create smart contracts necessary for the security tokens deal.
Any potential traders will, however, have to wait, as the firm has said that the token will not immediately be available for trading on exchanges, with the firm yet to complete all the groundwork needed.
Harbor has raised $38 million so far, with initial funding of $10 million and another $28 million investment round completed in April this year.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.