Swiss-based startup Alethena has completed the tokenization of its entire share capital on the Ethereum blockchain, becoming a European pioneer in the security token offerings (STO) space, the company said in an emailed statement to Cryptovest, which reached out with questions on the mechanics and the legality of performing an STO.
What is Alethena and what is its role in the security token ecosystem?
Alethena is the first blockchain-asset rating agency in Switzerland, well-connected with the Crypto Valley. Our aim is to empower the professionalization of the crypto market by providing due diligence expertise in this new field. From our own financing round and many talks with family offices, asset managers, and other professional investors, we understood that it is key for them to have claimable rights in their investment, meaning they are not interested in utility token investments but in venture capital (equity-based). As we are a very solution-oriented team, we did not want to wait until someone else came up with a suitable solution here in Switzerland, so we decided to become pioneers in tokenizing our entire share capital.
(Note: Alethena completed the token distribution on December 13.)
What does it take to turn a security into a token? Can you briefly describe the steps a business needs to take to tokenize its shares, for example?
There are two dimensions to differentiate: legal and technical. From the legal perspective, our solution has now been prototyped in the Swiss jurisdiction but can also be adapted for other jurisdictions. It requires an adaption of the bylaws of the limited company, the proof of the responsible government body, and some notary attestation. From the technical perspective, our prototype works on Ethereum (ERC20 standard) but is blockchain-agnostic, meaning there is a feasible solution on, for example, EOS. Ours calls for the set-up of a smart contract, including the features required from the company that is tokenizing. Last but not least, there is an electronic share register required, which will be provided by our partners from Ledgy (https://www.legdy.com).
How do you ensure that only quality businesses and reliable stock are tokenized?
Our core competence is due diligence. Therefore, all of our clients go through risk analysis to keep the threat of tokenizing a scam to the absolute minimum. In the long term, we aim to have companies with tokenized shares publicly rated by Alethena.
What type of investor are you targeting? Can...
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