Axiology, a Vilnius-based infrastructure for tokenized securities trading, has raised €2M in funding from angel investors, Baltic Sandbox Ventures, and Coinvest Capital. Led by Dr. Marius Jurgilas, the startup aims to revolutionize capital markets by leveraging Distributed Ledger Technology (DLT) to reduce costs associated with financial operations. The funding will be used to develop a regulatory-compliant infrastructure, starting with the tokenization of government bonds, and to apply for a DLT Transaction Settlement System license, with plans to commence regulated activities in the second half of 2024.
A spin-off of the SUPER HOW? technology lab, Axiology is an alternative capital market infrastructure that allows for more efficient capital market transactions by providing a robust trading and settlement system using DLT.
Dr. Jurgilas, formerly a central banker and now the founder of Axiology, observed that high costs in financial operations hinder companies from borrowing and impose heavy costs on small investors. He explained that Axiology uses innovative technology to harness new EU regulations, aiming to reduce costs associated with issuance, trading, settlement, and reporting, thus enhancing the EU capital market for businesses and individual investors.
The investment will be used towards the development of a fully functional, regulatory-compliant infrastructure, positioning Axiology as one of the first tokenized financial securities infrastructures in the EU.
The infrastructure will function under the EU Distributed Ledger Technology (DLT) Pilot Regime, allowing regulated financial market participants to use DLT to issue, trade, and settle tokenized financial instruments. The regime exempts new DLT-based financial infrastructures from the current securities regulation and aims to make the EU’s financial market work better.
Axiology’s initial use case involves the tokenization of government bonds to make these instruments easily and more efficiently available to retail investors across Europe.
“Axiology can be used for various purposes, and one of them can be direct financing by regular citizens for any cause they care about,” said Dr. Jurgilas. “For example, one of the first use cases we are considering relates to the defense needs of Lithuania. Our infrastructure would allow citizens to make direct financial contributions towards the safety of our country. This would be an alternative to higher taxes or increasing the foreign debt of our country. In principle, it can facilitate any ESG financial initiative.”
The main users of the solution will be financial institutions and their retail investors searching for better investment opportunities, and business enterprises looking for more accessible funds.
“Under the new regime, individuals can now trade tokenized securities directly with each other. However, we believe that specialized brokers are better suited to handle the client-facing aspect. These brokers are Axiology’s primary users and clients,“ said Dr. Jurgilas. “Their value proposition lies in their ability to enhance securities offerings and trading terms for their clients, which could potentially increase liquidity in the secondary market, especially for retail investors trading in smaller transaction sizes.”
The founding team of Axiology comprises internationally renowned fintech experts with backgrounds in regulatory affairs, banking, and the securities market, coming from companies like SUPER HOW? and FORT Legal. Dr. Jurgilas, in his role as a Bank of Lithuania Board Member, had previously played a pivotal role in creating a payments market infrastructure that facilitated the growth of the fintech ecosystem in the region and the EU. The experience of the team includes such projects as LBCOIN, the world’s first blockchain-based digital collector coin, digital Euro experimentation by ECB and Project Rosalind TechSprint, a CBDC experiment by the Bank for International Settlements (BIS) Innovation Hub London Centre and the Bank of England.
The Axiology team also collaborates with Ripple Labs, Inc., an American technology company that develops the Ripple payment protocol and exchange network that supported Axiology development with two consecutive grants. Axiology is also supporting Ripple Labs in their CBDC initiatives.
The round is co-led by Baltic Sandbox Ventures and Coinvest Capital, an early-stage venture capital fund, acting in a group with accredited business angels and angel syndicates.
“We’ve been impressed by the caliber of the founding team, their expertise in the financial markets and ability to explain very complicated challenges and solutions,” says Viktorija Trimbel, Managing Director of Coinvest Capital. “The ambition of Axiology founders to enable safe, efficient and affordable access to the capital markets, matching companies and investors, makes an excellent fit with the Fund’s mandate to foster development of the financing ecosystem and fill the market gaps.”
“Innovation fuels the future of finance. Tokenized securities are a key part of that future, both in the public and private markets. There are major technical, product, and business challenges to building toward that future, but that is also why it is a compelling opportunity for the right team to tackle it. Axiology has the ability, drive, and vision to lead this change, making finance more equitable, efficient, and transparent. We’re glad to be backing Axiology’s mission to redefine the future of the EU’s financial landscape,” says Sandra Golbreich, General Partner at Baltic Sandbox Ventures.
Axiology plans to apply for the DLT Transaction Settlement System (DLT-TSS) operator license which will lay the groundwork for the infrastructure to operate within the regulated framework of the financial industry. It aims to commence regulated activities in the second half of 2024, and in the meantime will work on strategic partnerships to further bolster its position and accelerate its growth trajectory.
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