Tokenizationguide
Tokenization platform setup in 4 easy steps
And why Germany offers a regulatory locational advantage
WHY?
Tokenization platforms in Germany
With the blockchain-based digitization of capital markets, basically any type of asset can be digitally represented through a tokenized investment product. Accordingly, in this new disruptive industry, one use case has become particularly prevalent: tokenization platforms.
Namely, tokenization allows assets to be fractionalized, which enables both institutional investors and retail investors to invest with comparatively small amounts. Market participants who now want to offer such investments in tokenized assets via an innovative business model must incorporate technological, regulatory and business strategy considerations into their strategy.
What benefits does a tokenization platform offer?
65% lower costs
compared to traditional securities, as the costs of the value chain are drastically reduced.
24/7 transferability
Previously illiquid assets can now be transferred easily around the clock anywhere in the world.
99% faster processing
faster settlement of processes, as the speed of transactions is significantly increased by the use of tokenized securities.
100% more transparency
because transactions are stored in an unchangeable and transparent manner. This strengthens trust between market participants.
These companies trust in our solution
HOW TO
Your own platform in 4 simple steps
For building your own tokenization platform, 4 steps are particularly important. These provide you with a rough roadmap for practical implementation. Our all-in-one tokenization solution covers the entire process of a securities issuance and allows you to launch a tokenization platform in under 6 weeks. Our team of experts will be happy to advise and guide you through the entire process.
Step 1: Define business model and asset
To ensure a smooth launch of the investment platform, a complex structuring process takes place initially. This involves, for example, asset selection, platform issues and the choice of the right instruments.
Step 2: Set regulatory framework
In Germany in particular, setting up an investment platform in compliance with the law is of great importance. In addition to the necessary licenses, there are also a number of laws, such as the Money Laundering Act, which must be complied with.
Step 3: Set up platform backend
The technical level belongs to the very core of your tokenization platform. The choice of blockchain, the custody solution or even a sensible smart contract logic, are of enormous importance in this context.
Step 4: Define the distribution strategy
Finally, an effective distribution concept is crucial to the success of an investment platform because, as with any product, the success of tokenized assets relies on distribution. The three most important include: In-house distribution, partner distribution and co-placements.
In 4 steps to your own tokenization platform
We are pleased that you are interested in tokenization. With this whitepaper you will get a summary of all the most important information to start your own project.
- Defined: tokenization platforms and asset tokenization.
- Define business model: financial instruments instead of assets
- Regulatory compliance: All relevant licenses at a glance
- Platform backend: choice of blockchain and smart contract logics
- Sales Strategy: Deciding on the right channels
Products
Find the right product package
From your own platform to the integration of crypto securities in a simple way.
Investment Platforms
The flexible solution for your investment platform
Financial Institutions
Support from pilot project to own license application
Asset Manager
Versatile use of your asset portfolio
TOKENIZATION-FAQ
Frequently asked questions
What does tokenization mean and what is a token?
Bafin defines tokenization as “the digital reproduction of an asset or value including the rights and obligations attached to it as well as the transferability this makes possible”. The digital representation is usually implemented on a blockchain. To map an asset on a blockchain, so-called tokens are issued. Each of these tokens represents a certain part of the mapped value. For this purpose, a contract is usually drawn up, which defines which rights and obligations result from a token. The tokens can be transferred completely digital to another party. This also transfers all rights and obligations from the contract. By tokenization, an asset can be transferred completely digitally. If an asset becomes transferable and is largely standardized, the BaFin considers it to be a security in the regulatory sense. The tokenized assets are therefore also called digital securities.
What assets can be tokenized?
In principle, almost any asset can be tokenized. As a rule, the legal situation in the jurisdiction of the issuing party and the structuring of the security is decisive.
Tokenization of corporate investments
In Germany, company investments are currently tokenized predominantly in the form of a profit participation right. Profit participation rights are very flexible and can completely map a company participation economically. A tokenized share or GmbH share is planned by the German government in its block chain strategy, but has not yet been implemented. In other jurisdictions, such as Lichtenstein, company shares can already be completely tokenized.
Tokenization Of Real Estate
Real estate can be tokenized via a so-called SPV (special-purpose vehicle). For this purpose, a company is set up whose purpose is to hold the real estate. The shares of this company are tokenized, making shares in the property transferable. To visualize this, we have created a case-study talking all about this topic. Click here for the case study.
Tokenization of tangible assets
The tokenization of tangible assets, e.g. art, is usually very similar to the tokenization of real estate. For this purpose, the tangible assets are transferred to an SPV (special-purpose vehicle), which is then tokenized.
Tokenization of (existing) securities
Even existing securities, e.g. a share, can be tokenized. By means of a legal structure similar to a tracker certificate, the value of an existing security can be mapped directly.
How does tokenization work?
In tokenization, an asset is legally linked to a digital representation (token) on a blockchain. With our Tokenization-as-a-Service infrastructure, no special blockchain know-how is required. You can either use our web-based Cashlink Studio to tokenize assets. Alternatively, you can connect our Tokenization API to your existing system.Our team will be happy to advise you and guide you through the complete process.
What is the meaning of a token?
A token is used to represent assets on the blockchain. These can be any type of asset, from artwork, real estate, and trees, to traditional financial instruments such as stocks. The process of mapping these real-world assets to a token is called tokenization. In this process, various types of tokens can be created, including securities. Below we explain two different types of tokens, which are regulated tokenized securities in Germany.
What are Security Tokens?
A Security Token (also called a sui generis security) is a token which is defined by BaFin as a security under prospectus law. They are therefore officially regulated securities in tokenized form. It is a crypto-asset which assigns membership rights or debt claims of pecuniary content to the holders. For example, the token represents a digital security for non-alcoholic organic wine, solar park projects, or shares in real estate construction projects. Security tokens therefore serve the same purpose as securities, but are issued digitally rather than in paper form.
And electronic securities?
Since the new electronic securities law was passed in 2021, it has been possible to issue electronic securities. A distinction is made here between central register securities and crytpowert securities. The latter is a subtype of electronic securities, which is characterized by a decentralized register. With the help of blockchain technology, a tokenized security is thus approved for the first time in Germany, which is now defined as a security not only in terms of prospectus law, but also from a civil law perspective.
Talk to our experts
Our team will be pleased to advise you, arrange a non-binding consultation now.
