Digital asset issuer Securitize has facilitated what it says is the first direct IRA investment in security token offerings (STOs).
A customer of alternative investments gateway AltoIRA purchased an initial investment in security tokens representing CityBlock Capital’s $20 million venture fund, with tokens issued by Securitize. The arrangement is set to open new opportunities for retirement account investors seeking exposure to digital securities, an alternative investment, said Securitize CEO Carlos Domingo.
“At the moment [digital securities] are not widely distributed,” Domingo said. “That makes it more complicated for investors to access them, creating a bad cycle.”
Before now, retirement investors were hard-pressed to find entry points into the high-risk, high-reward asset class AltoIRA CEO Eric Satz says has regularly outperformed the market.
“The idea of investing in alternative assets, much less a security token, would be anathema to traditional organizations,” Satz said, referring to companies such as Fidelity, TD Ameritrade and Schwab.
To overcome the institutional blockade, AltoIRA offers individuals those services as a self-directed Individual Retirement Account custodian. In effect this means AltoIRA facilitates trades and is the asset custodian, while the individual makes all investment decisions.
That introduces risk. But Satz said retirement account investors are up for the effort, and are not ones to invest in asset classes of any type without “doing their homework.”
“What we're trying to do is open the doors and provide access to the everyday investor, the same access to higher assets” that institutional investors have, Satz said.
In the case of CityBlock Capital, the tokens will represent CityBlock’s ventures fund NYCQ, a private fund with $10 million allocated to institutional investors. NYCQ includes holdings in CoinBase, Bakkt, Tagomi and Nomics.
UPDATE (Jan. 14, 14:55 UTC): While a press release said AltoIRA purchased the tokens, AltoIRA only facilitated the purchase on a customer's behalf. This article has been updated to clarify this distinction.