Tokens allow to represent assets like properties or securities like shares of a company. Whether you want to issue Non-fungible token (NFTs) to certify digital assets or whether you want to issue tokens for a Real Estate Investment Trust (REIT), Hensley&Cook and its partner companies provide you support along the whole process including the programming of Smart Contracts.
Whether you want to base your token on Ethereum, Cardano, Binance or another blockchain, we help you to put the legal framework in place, organise the custody of the assets, program the tokens and get them listed on the exchange of your choice. Hensley&Cook also assists in the set-up of Distributed Autonomous Organisations (DAO), stablecoins or similar.
A special solution is the listing of tokens at SECDEX, one of the stock exchanges of the Seychelles. Hensley&Cook is a registered sponsor at SECDEX.
What are Security Tokens?
Security Token Offering (STO) is a regulated offering of securities using digital tokens based on blockchain technology. Security Token Offerings (STOs) combine the blockchain technology with the requirements of regulated securities markets to achieve various advantages over the traditional trade of securities.
The blockchain could be based on an existing system such as Ethereum or be based on a specially created system to fulfil additional requirements. One of these requirements may include additional information in case of transfer and other controls to enable regulatory compliance. These tokens can be created, bought, registered in a wallet, transferred, sold and destroyed (“burned”).
How Can You Tokenise an Asset?
Security tokens are similar to analog securities but provide an easier and more secure way to trade it. By tokenizing assets such as company shares, real estate, pieces of art or intellectual property rights, the original owner of the assets can monetise such assets in whole or in part through an STO with much lower transaction costs and an immediate access to a wide audience.
The process starts with putting the asset into custody of the custodian in charge of the tokenisation. Tokens are then issued against the asset in custody, assigning to each token holder a defined share of the underlying asset.
Advantage of Tokenised Assets
There are a lot of good reasons, why tokenisation should be considered to trade assets.
These are a list of some of the advantages
Low Cost Transaction
The transfer of tokens follows a defined process, that is mainly the entry in the blockchain. The cost for this transaction is very low and doesn’t involve costly lawyers or similar.
High Speed of Processing
The simplicity of the transfer is reflected in the speed of processing a request. Transactions are done fast and are still properly documented.
Automated Service Function
Transaction with tokens can be handled by smart contracts. Such contracts can lead to an automated fulfilment (for example transfer of a token), when defined conditions are met (for example money booked on an account). This provides a high security for the fulfilment of contracts.
The automation of the process leads to a 24/7 access to the basic functions like buying and selling of tokens. This access may be limited in case of non-automated compliance checks.
Owner Registered in Blockchain
The ownership is defined in the blockchain, the new top standard when it comes to data security. The vast network of computers, that have to validate a transfer, make it impossible to cheat in the log entry.
Low Ticket Size Possible
The number of tokens issued against an asset in custody can be defined independently of for example the number of shares or the number of pieces of art represented by the tokens. This allows to chose a low ticket size for the tokens.
Internationalisation of Funding
Subject to legal limitation, tokenisation allows an immediate international access to investors. It becomes easier to approach investors from other countries and investors have no or less hurdles to invest in a token.
Low Cost for Custody
Banking services come with a steady increasing price tag. The costs for the administration of investment accounts are no difference to this fact. Holding tokens in a digital wallet is close to free of cost and dividend payments are done directly on the account of the holder of the tokens.