the The Tokenization of assets, provides for an increasing fusion of traditional and crypto-financial instruments. At the same time Security Token Offerings (STOs) provide the regulatory authorities around the world face new challenges: What Token shall require which is the regulation? When is the speech of a security when it is a Token investment?
By Christopher clover
On the 25. April 2019BTC$5.450,00 -0.23%part Facebook Twitter LinkedIn xing mail
The German Federal financial services Supervisory authority, BaFin has taken on this question in a journal article. The authority has noted a „paradigm shift“ as a result of the Tokenization of assets in the form of a Security Token.
What is an investment?
The capital investment act, the BaFin in the article refers to, defined a capital investment
shares, the participation in the earnings of a company to grant shares in assets of the Issuer or a third party in its own name for account of third parties, holds or manages (trust assets)shareholder loans (equity loans)subordinated loans, participation rights, registered bonds, other investments, the payment of interest and repayment, or assets cash in exchange for the temporary Provision of money grant or the prospect of Security Token as its own class of securities
The BaFin determines that the Token values as the digitized Form of property – as a category of securities must be considered. This applies also, if the tokenized financial instrument an asset.
a financial instrument is structured as an asset in accordance with § 1, paragraph 2, the capital investment act [investment law], or referred to, in the Form of a freely transferable and tradable Tokens […] digitized, the result is not an asset within the meaning of the capital investment act, but a securities […] This at least if the Instrument equity-related or membership rights or money wise legal guilt of a legal nature .
securities it is, according to the securities prospectus act:
a) shares and other securities, the shares or interests in corporations or other legal entities are comparable, as well as certificates for the shares vertretenb) debt securities, in particular bonds and certificates other than those in subparagraph a) of the securities vertretenc) any other securities, the for the purchase or sale of such securities entitle the holder, or to rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures is determined
most of the Token or crypto Now currencies transferred due to their technical nature is particularly good. Also the ability to trade on the financial market – because Bitcoin exchanges counts as BaFin is the financial market. What is different currencies Security Token Utility’s Token, and Crypto, so the securities-like claims, they represent.
example Bitbond: Germany’s first Security Token Offering
based on these criteria, does not understand why the BaFin considers, for example, Bitcoin as investment. Transferable? Check. Tradable? But Hello. However, you can acquire Bitcoin claims, for example on a return or have a say in a company? No.
it is Different with the Token „BB1“ of the company Bitbond. Of these, BaFin assessed as the value of paper – a precedent in the German regulatory history. The underlying financial instrument, i.e. what is tokenized, is a registered bond. Such a not really fall under the Definition of investment and not apply as the value of paper – there is no free tradability, since a Transfer is not provided to any other Person. This reached Bitbond, however, by the Form of goss, the bond in Token:
The underlying Instrument was originally designed to be used as the Name of bond, so as an investment, and would be subject to the capital investment act. By the Transfer on the Blockchain, however, was increased the ability to trade on the financial market. The tokenized investment was classified as investment sui generis [of its own] [ … ]
it is said in the article.
benefits for issuers and investors
For the Issuer – in this case, Bitbond – caused by, among other things, the advantage that the fault does not require a prescription without the usual securitisation in the Form of a physical certificate. The proof of ownership is done via the Token, and requires no paper. This, in turn, means that Intermediaries such as Clearstream, a Luxembourg-based international Depository for securities and a full subsidiary of Deutsche Börse AG.
Less middle men means more streamlined processes and more streamlined processes mean one thing: lower cost. Of the cost savings, the investors also benefit, however, because you need to purchase a Security Token, not the custodian Bank, which, in turn, requires fees; a Wallet is enough.
More Smack in the perspective
The BaFin speaks with regard to the Tokenization of the assets of a „paradigm shift“ – and reveals that she is currently reviewing a number of other prospectuses, other Security Token Offerings. Bitbond has made with the help of tokenization, the beginning. You may now be curious as to what assets land and equipment next on the Blockchain – the blessing of the highest German financial regulatory authority provided.
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