German Regulator BaFin Approves First Bitcoin-Based Security Token Offering

Germany's finance regulator BaFin has approved the first security token offering (STO) issued on a Bitcoin sidechain for the German market.

The approval was obtained by alternative asset marketplace STOKR to host the security token offering for sci-fi MMO Infinite Fleet, according to a press release shared with the BTC Times.

EXO, the security token sold in the offering, is issued on the Liquid Network, a Bitcoin sidechain developed by Bitcoin infrastructure firm Blockstream and operated by a federation of financial institutions. Originally designed primarily with the needs of traders in mind to offer an avenue for fast and confidential transactions to relieve the Bitcoin maintain, Liquid also allows for the issuance of security token offerings through the issuance platform Blockstream AMP.

The most notable STOs currently hosted on Liquid are Blockstream's Mining Note (BMN) and the above-mentioned Infinite Fleet, a game developed by Samson Mow's Pixelmatic. Infinite Fleet has further chosen to issue its in-game currency on Liquid, as well as make spaceships in-game available as NFTs on the sidechain, a step taken to allow for easy trading of in-game assets.

The BaFin approval marks the first time a Bitcoin sidechain-based STO has received the green light on the German market; previously, BaFin had only approved Ethereum-based offerings.

"Ethereum used to be the most popular platform for STOs, but its high fees and unreliable infrastructure are driving securities issuers to better alternatives," Infinite Fleet creator Samson Mow told the BTC Times, "Liquid is designed to empower capital markets and perfectly positioned to serve as a platform for digital securities offerings."

In the future, Bitcoin may become the infrastructure of choice for security token issuers, STOKR co-founder Tobias Seidl  believes: “We see Bitcoin as a fundamental backbone of the future capital markets, which will be built on blockchains.”

The security token market has seen accelerated growth this year, with its current market cap sitting above $1.1 billion, according to data from Security Token Market.