July 26, 2021

What are ‘security token offering’ and how can they help my company? | Additional features

The security tokens are crypto assets based on the technology blockchain linked to a traditional financial asset, the most common being the debt issued by companies seeking to finance their projects.

This type of tokens They grant the holder a series of rights, such as, for example, the receipt of a monthly or annual dividend linked to the profitability of the project being financed and the amount invested.

How can it help, and what are the advantages of a security token at the time of financing my company?

The issuance of corporate debt is a very common way to get financing for my company or to finance business projects that cannot be carried out solely with own funds.

The security tokens can be distributed from an STO (Security Token Offering) on debt of companies whose basis is the participatory financing of the project. This offers different advantages compared to traditional forms of financing; one of them is liquidity, since investors can enter with relatively small amounts buying only a percentage of the project.

Other is the visibility, for a company that lists its tokens in a marketplace dedicated to commercialization or transmission of security tokens You can improve the dissemination of your project through the network effect generated by the platform itself.

Finally, the technology blockchain guarantees transparency and efficiency in the transfer of these tokens, reducing the bureaucracy necessary for its transmission, making peer-to-peer transmission (between individuals) easier for the investor who has invested and wants to get rid of their security tokens.

What to take into account when issuing a security token?

Samuel Jariod, LABE Abogados tax advisor.

Samuel Jariod, LABE Abogados tax advisor.

First of all, it is necessary to define the project to which the funds that we intend to raise are going to be destined, in order to be able to present it clearly to potential investors and that the publicity of the project and the token be transparent.

Second, we must define the economic rights that we want to grant to the holders of the token. If we only want to grant yields linked to the project, we can choose to tokenize a participating loan or a participating account; However, if we want investors to become part of the shareholding, we must seek to tokenize a loan or bond convertible into shares.

Finally, we must choose marketplace or place where the tokens, as well as a participatory financing platform (PFP) that manages collections and payments of our token.

What requirements does the issuance of my security token?

Ignacio Moya, LABE Abogados tax advisor.

Ignacio Moya, LABE Abogados tax advisor.

As long as we issue debt for an amount of less than eight million euros and its duration is less than 12 months, our issue will not have the qualification of a public offering and, therefore, we will avoid having to prepare an investment prospectus that necessarily must approve the National Securities Market Commission.

Our STO and its whitepaper It will have to be validated by an investment services company (ESI), being, however, a much faster process.

What interesting tokenization projects are there in Spain?

One of the projects referring to the time of be financed through an STO is the one that arose within the company Green Data Chain, technology division of the Seroil Energy Group and collaborator of the LABE group. With the issuance of convertible debt into shares of the company, they seek to expand their bitcoin mining power by acquiring new equipment. The main attraction of the project is the use of renewable energy to mine bitcoin, even producing negative CO emissionstwo. With this, the main drawback of cryptocurrency mining is solved and a competitive advantage is given to the company.

What are 'security token offering' and how can they help my company?

The tokenization of assets presents several advantages such as having a broader investment market than traditional models, the power tokenize any type of asset (from a work of art to future benefits), as well as that it presents greater liquidity for the owners of tokens named token holders. Our tax advisers of LABE Lawyers they will explain in depth all the advantages that the tokenization and the steps to follow so that you can tokenize your assets.


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