Tokenization

Tokenized Securities = Security Tokens

Similar to real estate funds listed on public exchanges (typically REIT), the tokenization of investor contributions offers a multitude of benefits. Tokenization utilizes blockchain technology to map ownership on a distributed ledger. Aside from being immutable, this distributed ledger technology also offers some other key benefits when it comes to securities, which we will touch upon here.
Liquidity
The token ecosystem is borderless and global by nature. Therewith, tokenized securities can be traded globally and reach a larger audience. Token values can represent fractions of share values, allowing even the smallest amounts to be tradable.
Investments
One of the key benefits of tokenization is the effect of fractional ownership of assets that normally are too expensive to meet market liquidity. Via tokenization, any valuable asset such as real estate, fine art, rare vehicles, or other physical asset can be fractionalized and traded.
Lower fees
In comparison to traditional costs of transferring ownership, tokens can be transferred at a mere fraction of the cost. Some blockchains do not charge any transaction fees, making transfers literally free.
Faster execution
Distributed ledgers are constantly updated and always accurate. Entries are tamper proof and do not require any centralized third party, making ownership transfers fast, correct, and immutable.

advantages

SECURITY TOKENS

Tokenized securities offer a range of advantages over traditional Real Estate Investment Trusts (REIT)
advantage REIT Tokens
Low minimum investment
Traded in public exchanges
Public market liquidity
Professional management
Investment risk diversification
Impacted by volatility in stock exchanges
Low listing costs
Instant transaction settlement
Removal of fees for intermediaries
Acceptance of development projects

approach

designing security tokens

Security tokens can feature elements of equity and/or bonds, depending on how the token economics are structured. Currently, there are four main approaches to designing security tokens:
1
Tokenized funds
Each token represents a specific share in a fund. Profits can be shared via different mechanisms, either by paying dividends or by buying back tokens to therewith increase the value of remaining tokens. Tokens are tradeable and liquid, which is the key benefit over traditional fund contributions, which are largely illiquid, particularly when the fund invests into an illiquid asset class, such as real estate.
2
Equity tokens
Each token represents a full or a fraction of a share, but possesses the same or similar rights as current shareholders enjoy. They can vote, participate in dividend payouts and the sum of tokens represents the net present value of the company. Equity tokens can be restricted similar to restricted or preferred shares, where e.g. voting rights can be curtailed.
3
Bond tokens
These tokens represent a loan to a company, essentially a fraction of the debt owed by the company. These tokens could be used for interesting hybrid fixed income products, removing middlemen and shortening time-to-market for companies issuing these bond-like security tokens.
4
Asset-backed tokens
These tokens represent a fractional ownership in an underlying asset of any kind, such as real estate, fine art, or other investment assets that benefit from dividing ownership into smaller fractions to unlock a liquidity premium. Asset-backed security tokens are similar to derivatives, yet they directly represent a part of the underlying asset.

tokenization focus

casa tokenization

CASA will issue either fund tokens or equity tokens, depending on the underlying legal structure. Blockchain technology and particularly the tokenization of securities is still an immature technology and a novel approach. CASA intends to be among the first movers in this space as it clearly brings key benefits to investors. However, before we will begin to issue tokens for investments, certain key components in the ecosystem need to be established, such as regulation (across all major jurisdictions where CASA investors reside and CASA is active in), infrastructure (custodians, tokenization engines), and exchanges that are fully licensed and provide liquidity for market participants.
We are working closely with industry partners to support the establishment of a securities token ecosystem that is fully compliant with existing securities law. We observe tremendous progress particularly with regards to infrastructure being built for security tokens. Many financial regulators of the more progressive economies globally have already issued statements with regards to a regulation of the token ecosystem, many seem to positively embrace the innovation of blockchain technology.
CASA expects to be able to start with a tokenization of securities by 2021, possibly delivering a proof-of-concept already in 2020.