Transfer agents record securities ownership records. See this brief explainer. Every public company on Earth must by law have a transfer agent.
The transfer agent market today operates as a hugely-high-margin industrial oligopoly that overcharges issuers to the tune of billions a year based on opaque, centralized bookkeeping trust, while simultaneously hitting shareholders with extremely high fees or colossal logistical inconveniences to transfer or otherwise manage security ownership records, characterized by systematic disenfranchisement of international investors, especially struggling participants in poorer nations. Such would-be securityholders oftentimes simply cannot afford to cough up many months of savings for a single transfer characterized by a medallion signature guarantee certification stamp. We tackled both of these challenges with our startup.
What it does
We went through the expansive regulatory process of registering as a securities transfer agent with the U.S. Securities and Exchange Commission so that we can service public issues. Through a number of industry breakthroughs which we've detailed and submitted in a utility patent, we built a transfer agent from the ground up on the Stellar blockchain. In contrast with centralized transfer agents which oftentimes take weeks to transfer shares, our platform allows securityholders to transfer assets instantaneously (sub-5 seconds) on the Stellar blockchain. Through other innovations, namely signature guarantees derived from cryptographic proofs, we’ve not only opened the equities of our issuers to the billions of people on this planet without a bank account, but we’ve also drastically cut the cost of a transfer agent. That means issuers save enough for a new car every year, while shareholders get newly-equitable direct transparent asset ownership.
How we built it
Most of the interfacing tools we use with the Stellar blockchain are public at our repo, and we’re happy to review any pull requests <3
Challenges we ran into
- We transferred our implementation from L2 (optimistic rollup) Ethereum to Stellar for ideological alignment and performance optimizations.
- Bringing together a high-quality frontend UI to entice issuers while making it easy for shareholders to independently do routine transfers, balance attestations, and proxy votes.
- The logistics, regulation, and distribution of proxy materials.
- Interfacing with Stellar validator nodes and roadmapping our federation, anchor redemption, and Horizon instance.
- Updating master securityholder files based on blockchain balances for regulatory reporting.
- Setting up banking infrastructure for traditional dividend distribution (USD stablecoins just aren’t as of yet far enough for this. If you’re working on something like this, reach out!)
Accomplishments that we're proud of
- All that regulatory compliance.
- Turning a 180 protocol implementation flip into a streamlined finished product.
- Submitting our utility patent application.
- Finalist TV media spotlights in the InVenture Prize, a contest I’ve personally been striving to compete in since getting to Georgia Tech.
- Admission to GT’s CreateX Startup Accelerator, for similar reasons.
- One of six fintech speakers at SFVegas, the largest financial-officer event in corporate America. This will put us right alongside four-plus-decade industry veterans and in front of 8000 participants, including essentially every single target client of ours (CFOs of public firms).
What we learned
Everything gets a lot easier after you read thousands of pages of legislation.
What's next for Block Transfer
We receive final SEC approval to begin transfer-agent operations on August 20th. After some basic fingerprinting, we’ve got hundreds of microcap issuers we’ve been marketing to via direct mail, and we plan to begin acting as their transfer agent. Six months down the line, we’ll qualify as a FAST agent at DTCC and begin scaling in small-, mid-, large-cap stocks etc.
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