Stonegate looks to ‘modernise’ investment fund products with digital securities

Partnership with SEC-registered transfer agent set to bring a new digital asset solution to institutional investors.

By Jonathan Watkins

Stonegate Global Fund Administration is looking to deploy services to establish and administer digital asset investment fund products through a new partnership and solution.

The fund services provider has penned a deal with digital asset firm, Securitize, the SEC-registered transfer agent converting private assets and traditional financial securities into digital securities.

Together, the firms are working on a solution “to deliver on the promise of digital securities with improved usability and liquidity” according to a statement.

As global markets and digital asset technology evolves, we will continue to see more assets structured via digital securities in lieu of traditional, paper-backed securities,” said John McCorvey, CEO of Stonegate Global.

“Digital securitisation creates secondary markets and real-time liquidity for assets which are otherwise highly illiquid longer-duration investments. Layering the digital securitisation process onto traditionally illiquid investment products also provides far more market transparency and price discovery for assets.” 

Stonegate is one of a handful of fund administrators offering digital asset services, something seen as a crucial component of a potential uptake from institutional investors of the new products.

In May last year, PwC said there was a lack of ‘traditional’ fund administrators in the crypto asset space and most funds use relatively small fund administrators for NAV calculations. However, the consultancy giant said the services of incumbents was crucial to the asset classes’ growth.

“Independent valuation is key in order to verify fund performance and to give investors, particularly institutional investors, peace of mind that their assets are being properly valued,” the report said.

“Today there are only a limited number of fund administrators servicing the crypto space. But this looks set to change over the coming months as the industry matures and some of the more established players become more comfortable with crypto assets and decide to move into this space.”

Securitize, meanwhile, is financially backed by major institutions including MUFG, Nomura, Santander and Sony Financial Ventures, andspecialises in modernising capital markets through the creation of digital securities the firm claims are easier to own, simpler to manage, and faster to trade. Its clients include hedge funds, venture funds, REITs as well as the family offices, high-net-worth individuals and financial institutions investing in these funds.

“Securitize has led the way from the very inception of the digital securities market by partnering with the best and most innovative firms that help our customers have a complete service offering,” said Carlos Domingo, CEO and co-founder of Securitize, “Evolving our product offering to be integrated with Stonegate’s industry-leading fund admin product coupled with our digital transfer agent services really meets the needs of our growing customer base.”

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