The introduction of Security token frameworks has offered a large scale improvements for how assets can be traded seamlessly around the world. With blockchain at its core, the potential for innovation in this area is endless. the global community of developers and investors have shown key interest on working towards the STO space in last few months. Compliant securities issued on a blockchain will take us forward into a future where global liquidity can reach previously unexplored markets.
The importance of quality issuance platforms is the need of the hour to enable the securities market flourish in a long run. In this nascent industry, DigiShares is one of the first compliant STO issuance platforms in Europe that enable firms to tokenize assets, equity and funds. The platform provides fully compliant and customizable work-flows for KYC, AML and accreditation, and an advanced and secure payment system that allows your investors to pay in fiat and crypto.
“Claus Skaaning, Co-Founder | CEO DigiShares”
STOupdates got in touch with Claus Skaaning, Co-Founder and CEO of Digishares to understand better how the platform aims to change the face of current financial world.
Tell us about DigiShares and its ecosystem briefly and the problems you are trying to solve in the current market?
DigiShares is a white-label STO / security token issuance and management platform. We enable companies to tokenize their equity (and other securities) and manage these on an ongoing basis for years to come. We are partnering with advisors across the globe to provide an end-to-end offering and create deal flow. The main vision is to democratize access to capital for companies with increased liquidity and increased access to invest in projects for retail and institutional investors.
The OTC market in Europe and the US is not functioning and IPOs have long been very infrequent. Raising capital is extremely difficult and very expensive. DigiShares can tokenize equity and make unlisted shares tradeable in an easier and less expensive manner than today. Cross-border compliance issues can be reduced by automated smart contracts in the tokens, to enable global trading of tokenized securities.
Which blockchains do you currently work with and what do you think makes your product stand apart?
We at present work with two of the leading prospects: Ethereum (R-Token) and Stellar. Our primary focus is on white-label partners, so our platform is optimized towards operating under other brand names and corporate identities. We also provide certain functions that are unique in today’s market.
“Step by Step Approach for Tokenization”
Can you take us through your step by step approach of how you help out a firm looking to tokenize assets?
- The first step is Token and smart contract design
- Setting up of the platform with the client’s brand and corporate ID
- Customization of platform to client’s specific type of capital raise, legal structure and type of investors (jurisdiction, sophisticated / retail, etc.)
- Supporting the platform through the STO itself
- Supporting the platform following the STO where payments are received and tokens are issued
- Providing assistance with the subsequent listing of tokens on security token exchanges
- Supporting the adoption of custody solutions for token holders
- Supporting the adoption of KYC/AML verification services for investors
- Continuously doing checks and measures on the platform as an ongoing basis, so as the the client’s platform works efficiently for years to come
With the arrival of security token model of fundraising, what benefits do you think it will bring for the industry? Are there any harmful affects this might also bring?
We feel it will lead to increased ability for retail and institutional investors to invest in new types of projects and it will reduce the difficulty in raising capital for many projects – this will in general have a positive effect on the world economy. Traditional financial companies will be forced to lower their fees and some of them will become irrelevant.
With the disadvantages in short-term we might see some unprofessional / unserious players, who might take the advantage of the booming market to fool investors. Also, a lot of regulatory uncertainty that today exists in the market might hamper the growth of this rising industry.
“Regulations and Affect on Small – Mid Cap Firms”
Regulations are the major roadblocks in this space, how do you make sure that every service you offer remains regulatory complaint?
Actually regulations are not a big roadblock for STOs. Security tokens (tokens with security properties) can be issued and sold in most jurisdictions today if financial regulations are followed. Tokenized securities (shares, bonds, etc.) can be issued in some jurisdictions (like Denmark and Luxembourg) but cannot easily be tokenized in other countries due to requirements for paper-based certificates or notarized trades.
Our solution provides a dashboard for the issuer with an ownership cap table that is automatically updated when tokens are traded. The token smart contract automatically checks that the buyer is whitelisted and updates the share cap table if the trade is allowed. This ensures that the issuer will avoid non-compliance. The solution further provides the investor with a dashboard to register and get verified through a customized KYC/AML process.
Do you think tokenization will prove to be beneficial for small or medium size firms also and not just for large firms?
Short-term tokenization will primary be beneficial for large firms (investment funds, real asset funds) since there is not enough liquidity for smaller projects yet. But longer-term tokenization will benefit any size project. Platforms will develop to fill different niches. Recent industry report quoted 57% annual growth rates and I believe this to be on the conservative side.
“DigiShares STO & Key Focus Areas”
What is the vision behind launching the DigiShares STO and what do you aim to achieve with the funds generated? Where do you see the firm in coming years?
We are doing the STO in order to raise funds for the continued development of the product and most of all, significant marketing world-wide. The secondary goal is to test out our platform by doing our own STO as pilot, and finally the STO itself is designed to be a public offering so it will market the platform at the same time as raising capital for it. The STO is currently in private placement.
With the market moving too fast, we can’t look this many years into the future. We are definitely aiming for many white-label partnerships and a fully developed top compliant and top secure solution for issuance and ongoing management.
What is your major target market? Are there any specific countries or industries you are majorly focusing initially?
Our initial focus lies on the large funds in European jurisdiction. But on the long term basis and considering our future growth, we remain open to work globally.
To summarize things up for DigiShares, following are the services and features provided by the DigiShares platform:
Services offered by DigiShares
- Tokenize Assets
- Tokenize Equity
- Tokenize Securities
- Tokenize Funds
Features offered by the DigiShares
- Investor Dashboard
- Issuer Dashboard
- Automated Trading Compliance
- Share Cap Table
- Voting System
- Payment of Dividends
- Freezing/renewal of Tokens
- Digital Stocks Certificates
- Investor Forum and Internal Trading
Editor’s Note: Some of the quotes from Claus have been rewritten in simple words to make it easier for the readers to get a clear understanding.