ABO Digital, the private digital asset investment arm of Alpha Blue Ocean, has formed a partnership with AllianceBlock, a provider of blockchain infrastructure that bridges traditional finance and decentralized finance, to offer tokenized structured products for institutions and crypto projects and institutions seeking alternative forms of financing.
AllianceBlock will use its groundbreaking partnership with ABO Digital to leverage its decentralized and trustless blockchain infrastructure as well as the Nexera Protocol to tokenize conventional financial instruments and give capital providers who don’t want to hold digital assets the option to wrap them into conventional Actively Managed Certificates (AMCs). AllianceBlock’s goal to create frictionless gateways between Traditional Finance (TradFi) and Decentralized Finance has reached another significant turning point with the collaboration. (DeFi).
ABO Digital was created to offer a variety of structured financial products to the digital asset market, including convertible bonds, debt issuance, and warrants/options, providing the capital startups need to grow their customer and revenue base. ABO Digital will also explore providing alternative financial investments to institutions through tokenization.
By offering structured products, AllianceBlock and ABO Digital aim to provide cryptocurrency projects with an alternative to conventional funding methods. Rather than issuing tokens to market makers or venture capitalists through a Simple Agreement for Future Tokens (SAFT), this approach enables crypto projects to access more liquidity from institutional capital providers who comply with regulatory requirements.
Under the partnership, ABO Digital will help negotiate and structure financial instruments based on the project’s capital and liquidity requirements. AllianceBlock, together with Nexera Protocol’s infrastructure and NexeraID’s identity management toolkit, will tokenize and transform these into AMCs with full compliance. Participants’ capital will be locked into smart contracts, with those funds disbursed to projects only once the minimum funding threshold has been raised. In return, capital providers will receive a traditional AMC, with AllianceBlock managing the assets by holding the convertible bonds, debt or warrants. ABO Digital will receive a structuring fee based on the amount raised, with AllianceBlock taking the majority of fees for managing the AMC or directly through the tokenized asset.
The ability to fund promising crypto projects with less risky and compliant funding methods will be advantageous for institutional and retail participants as it will give them a different form of ownership than directly owning the project’s tokens. Additionally, through the Fundrs network, they will have access to token capital-raising rounds that are only open to major capital providers and the AllianceBlock community.
ABO Digital and AllianceBlock will further bridge the gap between the crypto community and traditional financial markets by offering large crypto funds, private equity firms and other market participants the ability to provide capital in tokenized forms of traditional financial instruments, including shares, options, bonds, tokenized funds and tokenized AMCs. Tokenization will help these novel instruments to reach new classes of investors across both worlds, therefore increasing market liquidity.
Institutional capital providers are closely observing the tokenization of tangible assets and their potential impact on investment strategies. Traditional methods for trading tangible assets, which rely on paper-based ownership records, are outdated and result in longer transaction times and higher costs. Additionally, the subdivision of tangible assets is limited due to these traditional models. Tokenization of tangible assets allows for fractional ownership and simplifies trading, making access to new markets more accessible and secure. Consequently, tokenization is expected to revolutionize asset management in the long term.
Rachid Ajaja, CEO of AllianceBlock said “Through this strategic partnership, AllianceBlock is set to revolutionize the industry by leveraging its infrastructure to tokenise traditional financial instruments and new instruments for the digital asset space, taking a giant leap forward in providing institutions with a more compliant and risk-averse way to take advantage of DeFi’s benefits. This partnership marks a significant milestone for both companies and the industry as a whole, demonstrating our commitment to innovation, compliance, and risk management. The future of finance is looking brighter than ever.”
Amine Nedjai, CEO of ABO Digital said “Together, ABO Digital and AllianceBlock represent the perfect combination of innovation, expertise, and professionalism in the cryptocurrency market. With our combined effort, we aim to bring a fresh perspective to the world of decentralized and traditional finance and attract more institutional capital providers. We look forward to working with AllianceBlock and paving the way for a new era in finance, one that is both creative and professional.”
The AllianceBlock and ABO Digital partnership is a creative illustration of how the traditional finance and digital asset sectors can complement one another. Traditional institutions will be able to use tokenization to access a new class of hitherto inaccessible assets as the industry develops and AllianceBlock extends the idea of structured financial instruments in cryptocurrency.