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Asset Fund Asset Token Asset Tokenization Bitcoin Blockchain Blockchain Securities Commecial Real Estate CRE Cryptocurrency Debt Token Decentralized Finance DeFi Digital Asset Digital Securities Distributed Ledger Technology DLT Equity Token Ethereum Ether Liquidity Engineering Legally Compliant Token PE Fund Private Equity Fund REIT Reg D Reg A+ Security Token Security Token Offering STO STO Platform Tezos Tokenized Securities VC Fund Venture Capital Fund
Biography
PORTFOLIO: ABZON.com
I am a recognized expert and key contributor in the blockchain and digital assets industries, authoring numerous articles appearing in key publications over the years. My work now centers on providing investor intelligence on tokenized securities moving out of lockup and into secondary trading.
Below are three examples illustrating how blockchain technology facilitates capital formation and asset liquidity, followed by a quick look at the securities tokenization process.
☑ Private REIT Liquidity
· Old Thinking ¯\_(ツ)_/¯ ❝Illiquidity makes private REITs hard to buy and harder to sell in an industry still running on spreadsheets and fax machines.❞
· New Thinking 📈 ❝Asset tokenization transforms REIT shares into security tokens that facilitate paperless trading among LPs. Cap table automation saves time. Broker disintermediation cuts costs. Security tokens can serve as loan collateral for stablecoins and cash liquidity.❞
☑ Early-stage funding ─ Reg D 506(c) STO (Security Token Offering)
•US & foreign issuers can raise any amount from accredited investors.
·Typical raise $500,000 to $2 million
·Low costs for legal fees, audits, investor onboarding
·Multi-year fundraising window
☑ Reg A+ STO (aka ‘tokenized mini-IPO’)
•US & Canadian issuers can raise as much as $50 million from accredited and ‘Main Street’ investors.
·Typical raise $8 million to $15 million
·Significant costs for legal fees, audits, investor onboarding
·1-year fundraising window
Securities Tokenization
➊ A blockchain technology called ‘asset tokenization’ transforms traditional shares into tradeable digital assets called ‘security tokensʼ.
➋ Each security token self-executes investment contracts, adherence to shareholder caps, and lockup period compliance.
➌ Cap table automation simplifies administration of disclosures, consents, distributions, and voting.
➍ Paperless trading among LPs can be authorized case-by-case or allowed more broadly.
➎ ATS listing may open secondary market exposure that mollifies illiquidity discounting.
➏ Well-timed listing on a security token exchange may open price discovery that shores up NAV.
Growing Opportunity at the Intersection of Blockchain Technology and Business Strategy
✉ jderenthal@gmail.com 📱 +1 916-616-6116
Good question. The answer could fill a book, and probably will soon. Here is a rough outline of a few of the benefits of STOs for capital formation issuers, investment fund admins, and individual investors:
Security Token Offering Benefits for Issuers
•Cap table automation streamlines investor management and administration.
•Smart contracts make it possible to code ownership and transfer restrictions into the token. These smart contracts execute upon the advent of certain contingencies tied to each jurisdiction's laws, thus governing the token's compliance with regulatory protocols. This helps to keep issuers out of hot water with the SEC.
•Accounting, auditing, and tax reporting processes are simplified.
•Primary and secondary market liquidity opportunities are much more significant with tokenized securities. Over time, as security token trading becomes more prevalent, these liquidity opportunities will become liquidity realities. It is at that point that the market for security tokens will accelerate quickly.
•Private Equity funds and Venture funds can offer their LPs an early exit. In fact, entire funds may more easily choose early liquidation when there is a strategic or tactical advantage in doing so.
Security Token Offering Benefits for Investors
•STOs open the door for retail investors to invest in private funds, commercial real estate, startups, and mid-stage companies.
•Transparency - Security Token Offerings are regulated. Blockchain provides a method of immutably verifying and tracking investor data.
•Trades on a blockchain settle in a matter of minutes rather than days.
•Compliance is semi-automated, opening the possibility that someday soon, security tokens may be freely traded anywhere they are deemed compliant.
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