Welcome to this month’s edition of Tokeny Insights.
I have spent the last two weeks exploring the market in Asia Pacific. Similarly to Europe, there is now a good understanding of blockchain technology and how it will transform capital markets. One common question I receive when talking to individuals who wish to start tokenizing their assets is – where do I begin?
Before you open your company or project to external investors via a token sale, you can start by tokenizing your existing assets. It will clean your cap table and provide more transferability for your investors. The most common form of token uses the Etherium blockchain, you can purchase ether with Independent Reserve or leave it to your chosen broker or STO to manage the process. Once tokenized, your assets can be traded like traditional securities.
Most companies have a paper-based registry of shareholders. Every time there is a change in the cap table, managers or agents need to update it manually. Whilst this can be sufficient for companies at the beginning, it becomes more troublesome to efficiently maintain as the company grows. When the number of investors or transfers increases for a company, it can be quite complex and costly to manage for business owners. Corporate actions such as stock splits, communications and dividend payouts can further complicate matters when processed by manual methods.
By creating a set of smart contracts that represent the assets and their investor eligibility rules and linking this to the company’s on-chain identity, firms can benefit from a tokenized cap table. Business owners are now able to remove the burden of manually updating their cap tables by implementing a digital-first system that allows them to access real-time information and perform corporate actions on demand. In addition to that, smart contracts might also prove useful in financial audit and tax planning, which is usually done by expert accountants at the end of every fiscal year. Also, smart contracts can remove the risk of manipulation as they are kept in an encrypted form.
To begin the tokenization of your assets, you need to verify two main aspects in your jurisdiction:
- Can you manage your company registry in an electronic format?
- Do security tokens follow the same rules as traditional securities?
If the answer is yes to these questions, it is not complicated to propose this to your investors and tokenize your company. I look forward to hearing your comments on the matter.
As usual, please see the below for a curated list of news in the space over the last month.
Significant news and insights selected by our team of security token experts
Black Manta Partners with Tokeny to Launch Multi-STO Platform in Europe
Black Manta Capital and Tokeny joined forces for the development of a multi-securities token offering (STO) for the European market.
ING Applies Digital Notary to Blockchain Transactions
ING says it has solved the privacy versus security trade-offs on R3’s Corda network through the application of a ‘zero knowledge proof notary’.
Tokeny Solutions Included in KPMG’s Coveted Global Fintech 100
The Fintech100 highlights truly innovative companies, creating products and services at the juncture of technology and financial services.
Facebook Open to Currency Pegged Stablecoins for Libra Project
Facebook said the initiative could use cryptocurrencies based on national currencies such as the dollar, instead of the synthetic one it initially proposed.
Banking Giant Standard Chartered Joins Enterprise Ethereum Alliance
British multinational banking giant Standard Chartered, with over $685 billion in total assets, has joined the Enterprise Ethereum Alliance.
Fundament to Provide Institutional Grade Custody in New Partnership with “DACS,” Digital Asset Custody Services
Fundament Securities will provide institutional-grade custody solution for its digital assets in a new partnership with DACS “Digital Asset Custody Solution” a digital asset lifecycle management business.
Harbor Receives Transfer Agent License from SEC to Help Security Token Issuers Pay Out Dividends
Harbor, the firm that aims to be the “one-stop shop” for security token issuers, has inched closer to that goal after obtaining a transfer agent license from the SEC.
COMPLIANCE IN FOCUS
Compliance and regulatory news curated by our team of industry insiders
Hong Kong Regulator to Treat Some Crypto Exchanges Like Brokers
Hong Kong’s securities watchdog is to treat cryptocurrency trading platforms like traditional brokers if they offer security tokens, according to its second round of regulatory guidance for the industry.
China Passes Cryptography Law as Gears up for Digital Currency
China’s largely rubber stamp parliament has passed a new law on cryptography as the country gears up to launch its own digital currency, state media reported late on Saturday. Take a look on https://www.cripto-valuta.net/en/yuanpay-group/ to find out more about the China-based digital currency.
SEC: Main Street Investors Should be Able to Invest in the Private Market on Terms Similar to Those Available to Institutional Investors
Securities and Exchange Commission (SEC) Chairman Jay Clayton has re-affirmed his belief that retail investors should have a compliant path to access more private securities offerings.
U.K. Updates Crypto Taxation Guidance, Stressing That Crypto Like Bitcoin are Neither Currency nor Securities
The United Kingdom’s tax authority issued taxation guidance for businesses on Friday, complementing its previous guidelines for individuals.
Turkey Working on Digital Currency; Pilots Expected to Finish by End of 2020
Turkey is working to issue a blockchain-based national digital currency.
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