Republic to Launch Digital Securities Exchange with $150M Funding

Navigating the Regulatory Landscape of Digital Assets

A significant source of contention within the startup ecosystem revolves around the classification of digital assets as securities under the scrutiny of the U.S. Securities and Exchange Commission.

Republic's Approach to Compliance

While many perceive ambiguity in the existing regulations, Republic, a New York-based investment platform established five years ago, identifies a distinct opportunity. The company, led by CEO Kendrick Nguyen – whose background includes securities litigation at Goodwin Procter – has proactively positioned itself as a leading provider of what Nguyen terms “compliant tokenization.”

Republic is now signaling ambitious plans to expand its current infrastructure, potentially creating a marketplace specifically designed for digital securities – with a strong emphasis on their status as “securities” – enabling their purchase and resale.

The Gap in the Market for Digital Security Tokens

As Nguyen explained in a recent conversation, major U.S. exchanges currently do not facilitate trading of digital security tokens.

These tokens derive their value from tangible, tradable assets, such as real estate, differentiating them from utility tokens which grant access to a product or service.

The SEC’s clear stance on XRP, the cryptocurrency created by Ripple Labs, as a security is a key reason why exchanges like Coinbase refrain from listing it.

Building a Secondary Exchange

Nguyen stated that Republic is prepared to “partner immediately” with an exchange possessing the necessary capabilities, delivering excellent customer support, and enabling active secondary trading of both securities and digital securities within the U.S.

However, he asserts that such an exchange currently doesn’t exist.

Therefore, “should a viable solution not emerge within the next year, Republic will explore investment in, or the direct development of, a secondary exchange for digital securities through an affiliate.”

Expansion and Funding

This undertaking would represent one of the most ambitious projects within Republic’s growing portfolio, which already serves over one million users and has attracted substantial financial backing.

Today, the company announced a $150 million Series B funding round spearheaded by Valor Equity Partners.

This follows a $36 million Series A round secured in March from Galaxy Interactive, Motley Fool Ventures, HOF Capital, Tribe Capital, and CoinFund, with those initial investors participating in this latest round alongside new contributors Pillar VC, Brevan Howard, GoldenTree, and Atreides.

Financial Overview

Nguyen revealed that, prior to this new round, Republic – which employs 200 individuals – had raised over $50 million in equity financing and an additional $20 million through a token sale.

Republic’s Diverse Business Units

The company is actively deploying these resources across several distinct business divisions.

These include a retail investment platform allowing investments starting at just $10, a private capital division managing nearly $1 billion in assets for accredited investors in startups, and a blockchain consultancy offering technical, financial, distribution, and tokenization services.

Republic also operates two affiliated closed-end investment funds focused on startups and crypto projects, alongside Republic Realm, a digital investment arm specializing in metaverses and NFTs.

A Unified Approach to Investment

When questioned about managing this diverse range of operations, Nguyen emphasized a unified approach.

He explained that Republic aims to serve all investors, regardless of their financial standing or interests.

“Whether you’re a high-net-worth individual seeking to deploy $100,000 or a young investor wanting to invest $20 in a video game, real estate, or a female-founded company, we provide opportunities for everyone.”