The tokenization agency of the Russian metallic large is increasing to America
Atomyze, a tokenization startup owned by Russian mining and smelting giant Nornickel, is opening a store in Greenwich, Connecticut to sell token metals in the United States.
The company, whose official name is Atomyze LLC, will be the second pillar of Nornickel's tokenization ambitions. In parallel, Tokentrust, another company that will mark Nornickel's metals as tokens for the company launched in Switzerland in February, will work together. Atomyze is currently not present in Russia.
Vladimir Potanin, CEO of Nornickel, told CoinDesk last year that there are two use cases for metal-backed tokens. First, industrial producers can use such tokens to flexibly change their contracts for the delivery of the actual metals.
Second, people interested in investing in the metals industry could use the tokens to bet on the prices of metals like palladium, copper, or nickel rather than buying stocks in companies like Nornickel.
Both Atomyze and Tokentrust will use a Hyperledger Fabric-powered backend, encoded by Nornickel engineers in conjunction with IBM, and issue tokens backed by the mining giant's inventory. Legally, however, their activities are separated, as each company – at least initially – only serves users in the country in which it is based.
Nornickel didn't answer questions about why the US and Switzerland will be the first two markets for Atomyze at press time. The large US market has generally been lucrative for financial services providers, although there can be regulatory hurdles.
In Russia, the regulatory situation is now clearer. A new law regulating the issuance of digital assets was passed this summer. From January, issuers registered with the Bank of Russia can start tokens centrally and with permission.
Due to the regulatory differences in Switzerland and the USA, the two companies will issue two different sets of tokens. At least in the initial stages, these tokens won't be interchangeable, said Jeanine Hightower-Sellitto, CEO of Atomyze LLC. She added that "Atomyze LLC was founded with a vision to develop products that are well-known and popular for the US market."
Hightower-Sellitto, a Wall Street veteran and former chief executive of the Gemini Crypto Exchange, was named CEO of the company in September to help build a commodity-backed token market that is fully compliant with U.S. regulations. Prior to Gemini, Hightower-Sellitto worked for the Nasdaq subsidiary International Securities Exchange (ISE) for 13 years.
In addition to Hightower-Sellitto, Atomyze now has some professionals who come from well-known crypto and blockchain companies. These include Corey Wendling, former senior vice president of Paxos; Jan Hendrik Scheufen, former Chief Product Officer at Scotland-based blockchain company Monax; and Lyon Hardgrave, who previously ran the blockchain oil trading startup Vakt.
Wendling told CoinDesk through a spokesman that he was drawn to Atomyze's ambition to "disrupt and change the way goods are traded by letting customers bring their own smart contracts and tokens onto our platform".
"We're building a system that is flexible and highly customizable to support many different types of assets," said Wendling.
He added that unlike the tokenization platforms already in place, Atomyze will take a more conservative, approved approach that would give customers more confidence in the security of the platform. This means that new companies that are ready to issue tokens on the platform will not be able to use the technology independently but will have to work with Atomyze.
The metals themselves – palladium, platinum, nickel, cobalt, and copper – are kept in a secure vault that is physically located in the United States, Hightower-Sellitto said. The name of the vault provider is neither public nor the names of the banks that are said to be involved in Atomyze LLC.
The vault's contents are being audited by U.S. auditors to ensure the tokens are 1: 1 secured by the actual metals, Hightower-Sellitto said.
She said Atomyze is currently starting work on its money transfer and trust licenses in the U.S. and plans to launch them in the late first quarter of 2021.
Hightower-Sellitto hopes to see institutional investors such as macro funds, hedge funds, foundations and accredited investors among Atomyze's customers. Investing in metals themselves is different from investing in stocks in metal-producing companies, as it allows investors to bet on the performance of entire industries as opposed to specific companies.
“You can invest in the auto companies, you can invest in Tesla, but there's a lot of noise in Tesla stock. So if you want to invest directly in the electric car market itself, you can invest in components of the electric car batteries, ”said Hightower-Sellitto.
The tokens that can be traded on Atomyze's proprietary platform are not considered securities, according to Hightower-Sellitto, and the company has not had any communication with the US Securities and Exchange Commission about it. This is because each token is backed up by actual metals, so customers can participate in spot goods transactions, Hightower-Sellitto said.
“It is important that our product is fully available. No customer wants to enter into a spot transaction and then find out that they are actually trading a product that is regulated as a swap of another type of derivative, ”she said.
Vladimir Potanin, CEO of Nornickel, told CoinDesk in an October 2019 interview that tokenized metals would attract industrial consumers as well as investors who don't need real palladium or nickel but want to bet on their prices.
Alexander Stoyanov, the managing director of the Nornickel subsidiary Global Palladium Fund, is on the board of Tokentrust based in Switzerland.
The Global Palladium Fund will be Atomyze's first issuer, according to Hightower-Sellitto, but in the future the platform may become a marketplace for other asset-backed tokens as well, and more issuers may want to take advantage of it.