The post Fintech Tuesday Tokenization & Securities appeared first on crowdfund.direct.
]]>DigiShares will introduce the concept of tokenization and speak about some industry use cases, most likely from real estate. We expect to be joined on the virtual stage by VP Securities, the leading Danish CSD (Central Securities Depository) and a leading researcher in the field.
DigiShares is a leader in the quickly growing tokenization industry and currently the only company in the Nordics of its type. DigiShares is focused on white-label partnerships where we deliver our technology and platform to our partners as well as the tokenization of real assets such as real estate, solar, wind, infrastructure, mining, etc.
Tokenization refers to the concept of issuing and managing securities as tokens on the blockchain. The blockchain infrastructure yields a number of interesting benefits for a more efficient financial infrastructure.
For an introduction to tokenization, please read this article.
We look forward to seeing you.
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]]>The post Fintech Disruption Summit 2020 Successfully Completed appeared first on crowdfund.direct.
]]>
On September 3rd we completed the second iteration of Fintech Disruption Summit. You can read about the event and the program here.
The focus of this year’s event was real estate tokenization, decentralized finance and tokenization of VC funds. While several speakers had experience with real estate tokenization, the tokenization of investment (and VC) funds is still an immature field.
More than 200 signed up for the conference indicating that tokenization is a hot and interesting topic for many. We are now ready with the videos from the event, so you can review the best moments from the conference.
All the videos can be accessed here.
We are starting to make plans for the next Fintech Disruption Summit, expected in February 2021 – most likely also virtual, in consideration of COVID-19. If you are interested in speaking or sponsoring – please reach out to us.
Individual links for the videos are included below. If you are interested in tokenization and want to see the highlights, you should watch videos #2, #9, #10 and panel 1.
Our personal highlights and moments of being a little bit starstruck were videos #15 (David Weild IV, Vice Chairman of NASDAQ and father of the JOBS act) and #17 (Alon Goren, top blockchain Silicon Valley VC). #1: Opening Remarks by Claus Skaaning, DigiShares
Watch here
#2: Keynote; Tokenized Securities; The Future of Investment
Ethan Pierse – Borderless Ventures / CryptoAssets Institute
Watch here
#3: Assets on the Blockchain – A Perspective
Martin von Haller Grønbæk – Bird&Bird
Watch here
#4: Legal Aspects of Tokenized Securities, Compliance & Operations
Boulevard A. Aladetoyinbo, Esq.
Watch here
#5: Decentralized Finance – A Financial Crime Perspective
Stefania Teodora Banu – Financial Crime Prevention Expert at Nordea Bank
Watch here
#6: The Next Generation of Regulatory Technologies and the Ways to Implement Them
Borys Pikalov – Head of Analytics, Co-Founder at Stobox
Watch here
#7: Legislation for Blockchain Projects in Switzerland & Liechtenstein
Yanina Petrovskaya
Watch here
#8: Blockchain Real Estate Registry
Oleksii Konashevych
Watch here
#9: Tokenization of Real Estate and Large Physical Assets
Claus Skaaning – CEO, DigiShares
Watch here
#10: Real Estate FinTech: Hype or Solution?
Andrew Baum
Watch here
#11: Innovation moves in S-Curves
Dr. Guenther Dobrauz
Watch here
#12: The Future of Real Asset Investment – a Family Office Perspective
Paul Huelsmann
Watch here
#13: Legal and Economic Opportunities to Reduce Transaction Costs with Fragmented Ownership-Recording
Jo Bronckers & Simon Duindam
Watch here
#14: Panel 1: Real Estate on the Blockchain
Moderator: Sam Jalaei
Participants: Andrew Baum, Paul Huelsmann, Oleksii Konashevych, Jo Bronckers
Watch here
#15: Why Growth Rates Will Differ Significantly: Crypto vs. Derivatives vs. Securities
David Weild IV – Chairman & CEO at Weild & Co., Inc.
Watch here
#16: Derisking DeFi – How to Derisk Decentralized Finance Investments
Edmund Lowell – KYC-Chain.com, Passports.io and SelfKey.org
Watch here
#17: Early-Stage Blockchain Investing
Alon Goren – Founding Partner of Draper Goren Holm
Watch here
#18: Panel 2: VC Investment Funds in the Blockchain in Sphere
Moderator: Nikolaj Juhl Hansen
Participants: Hazem Danny Nakib, Ethan Pierse, David Weild IV, Yanina Petrovskaya
Watch here.
Many thanks again to our partners Bird&Bird, TechNordicAdvocates, Copenhagen Fintech, and The Tokenizer.
DigiShares is the organizer of Fintech Disruption Summit. The goal is to educate the financial industry to better understand the value proposition of blockchain, and to motivate them to initiate more projects in the space.
DigiShares provides a white-label tokenization platform, supporting the issuance, corporate management, and trading of tokenized securities. We have a focus on real assets such as real estate, infrastructure, solar, wind, etc. If you are interested in partnering with us, please reach out.
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]]>The post New White-Label Client in the Real Estate Industry appeared first on crowdfund.direct.
]]>The project is based in the US and will work under the jurisdiction of Wyoming. Wyoming is one of the most forward looking jurisdictions world-wide when it comes to tokenization. They have recently introduced and passed a bill that allows corporate stocks to be tokenized (i.e., issued as tokens on the blockchain). In addition, a Wyoming-based LLC can be created for as little as $150, making Wyoming a perfect spot for US-based tokenization platforms that want to run frequent STOs (Security Token Offerings). The project expects to conduct 10-20 real estate tokenization projects already in year 1. With the very low cost of a Wyoming-based LLC, this becomes realistic.
As opposed to this, Europe as yet doesn’t have any inexpensive jurisdictions to set up tokenization projects. To begin with, there are only a few countries (Switzerland, Liechtenstein, etc.) where the legalities of tokenized securities have been reasonably clarified, but in these countries average fees per tokenization project easily exceeds EUR 100,000 including incorporation costs, legal fees, banking fees, etc. DigiShares is constantly monitoring jurisdictions and will always maintain an up-to-date overview of this with recommendations.
For this particular project, we are collaborating with Polymath and will use their standardized security token protocol framework, ERC1400. ERC1400 is a flexible and open source framework that is available for any tokenization project to use. It is a set of smart contracts for the issuance and management of security tokens, including modules for document handling, token transfers, whitelist management, and fungible tokens. The DigiShares platform is blockchain agnostic and can use most security token protocols. Currently around 95% of all STOs are carried out on Ethereum-based protocols but given the soaring Ethereum gas fees (up several 100% since January), other options such as Stellar, Tezos, EOS, etc. may suddenly become more attractive. Just these last couple of days there have been rumors of Ethereum gas fees upwards of $100.
We are also going to be integrating with Coinbase for their custody solutions. Investors’ wallets will be set up with Coinbase and through their custodian framework assets stored in Coinbase wallets will be insured. On-boarding and payment will also be carried out through Coinbase’s APIs.
The project is a co-development project where we deliver our standard multi-STO platform with investor management, corporate management, and trading, with some added functionality based on special requirements from the client. We expect to finalize the first deliverables in September such that the first real estate projects can be listed on the platform already in the second half of September.
On the business side, the client has the vision to become one of the leading platforms for real estate tokenization in the US, with already more than a hundred properties signed up to be listed on the platform.
Tokenize Your Real Estate
Many of our current projects are real estate tokenization projects, and for those of you who are specifically interested in real estate tokenization we have created a special page where you can learn about real estate tokenization and how to tokenize your project.
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]]>The post DigiShares Platform ExtendedWith New Functions appeared first on crowdfund.direct.
]]>The DigiShares platform is being expanded all the time, mostly based on customer demands. Currently we are working on custodian integration, transparent wallet setup and integration, and atomic transfers.
Custodians and Wallet Setup
DigiShares believes that the security token ecosystem will increasingly move towards custodied wallets, rather than self-managed wallets. The standard blockchain mentality is biased towards self-managed wallets since you are then 100% in control of your tokens (“not your private keys, not your bitcoin”), but in fact a majority of crypto users do not currently hold their private keys. Rather their crypto is deposited with an exchange, a DeFi provider, or a custodian. Many leading exchanges and DeFi providers deposit their customers’ crypto with custodians. Custodians provide insured wallets and accounts such that you are protected against any loss or failure on the service provider or custodian’s side. However, increasingly custodians also give you highly flexible and user-friendly wallets such that a custodied wallet has almost the same flexibility and functionality as a self-managed wallet.
Investors in the security token ecosystem with large holdings and institutional investors will not accept self-managed wallets but will always demand custodied wallets. We believe this requirement will gradually extend to accredited and retail investors as well.
Our white-label partners will be able to offer their users custodied wallets that are transparently created and managed by the DigiShares platform, as well as self-managed wallets, that the users create and manage on their own.
Atomic Transfers
An atomic transfer is defined as a purchase or trade where all transactions either succeed or fail. It is the essential component of decentralized exchanges where users have to be 100% sure that if they purchase some crypto and provide payment, that they also receive the desired crypto. Technically an atomic transfer is implemented as a smart contract that acts as a safe or an escrow. The buyer transfers their payment to this smart contract, and the seller transfers the tokens to be sold. Once both parties have transferred, the smart contract will release the payment to the seller and the purchased tokens to the buyer. If the contract fails for some reason, the payment will revert to the buyer and the tokens to be sold will revert to the seller.
The atomic transfer removes any counter-party risk and is unique for blockchain applications in that it can happen in a peer-to-peer fashion. Without blockchain, a trusted central party would be required to facilitate the transactions, such as a lawyer providing an escrow account at a high price.
DigiShares is now implementing atomic transfers to support both the purchasing and trading functions on the platform, such that for instance when a number of tokenized shares in a real estate project are purchased, and the payment is made in crypto or stablecoins.
Next week we will be back with a newsletter describing a new white-label client in the real estate industry.
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]]>The post DigiShares Receives Danish Public Grant appeared first on crowdfund.direct.
]]>The size of the grant is around EUR 62,000 and it is paid out to the top 5-10% of applicants in each application round.
The focus of DigiShares’ grant will be to further develop its capabilities within the real estate tokenization space with a focus on issuance, corporate management, and trading. DigiShares’ long term vision is to help facilitate the democratization of the real estate investment market and make it 10x more common for retail investors to include real estate in their investment portfolio.
Claus Skaaning, CEO of DigiShares, says, “The awarding of the grant is a stamp of recognition on DigiShares’ strategy and technology and will longer term make it easier for us to collaborate with large real estate developers and institutional investors. With the Innofounder and other grant programs, the Danish Innovation Fund has made it significantly easier for companies with experimental break-through innovations to get to market. We are very grateful for the recognition and support.”.
About the Innovation Fund:
Click here.
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]]>The post DigiShares Chosen for Holt Selection Day appeared first on crowdfund.direct.
]]>The Holt Accelerator is among the world’s leading fintech accelerators. It is based in Canada and is a recognized route into the North American market as well as the institutional markets.
For its 2020 cohort, Holt received 724 applications, and the top 3% were selected for the Holt Selection Day. We are proud to be among the 24 teams selected.
The Selection Day is an intense competition where participants pitch to 130 advisors in 16 rounds. The Selection Day for 2020 is today, June 16th.
DigiShares views the Holt Accelerator as an important and efficient element of our go-to-market strategy. If selected for the 2020 cohort, it will help us accelerate our global business strategy, to be on the forefront of tokenization, and to be increasingly working closely with established financial services and capital markets companies.
Wish us luck!
About Holt Fintech Accelerator.
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]]>The post AbacasXchange Inc. and DigiShares Partner on Digital Assets appeared first on crowdfund.direct.
]]>AbacasXchange Inc., a leader in tokenized asset exchanges, and DigiShares, a leading provider of white-label issuance solutions for digital assets, have signed a partnership agreement to further develop their collaboration in order to provide end-to-end solutions for asset managers looking to digitize their assets and achieve better liquidity.
We are currently witnessing a global megatrend where the entire financial industry is digitizing their processes and their assets, and increasingly using blockchain technology for this purpose. The process of digitizing assets on the blockchain is called “tokenization”. The ownership of assets such as shares, bonds, debt instruments, etc. are being represented as tokens on the blockchain, enabling processes related to issuance, transfer and trading of securities to be rendered much more efficient, more transparent and more secure. In addition, the consensus-based trust paradigm of blockchain will be extended to also cover securities, eliminating doubts about ownership and settlement, and enabling the elimination of middlemen such as banks, custodians, notaries, and other types of trustees that are used to a role as a third-party guarantor. This will lead to reduced fees and costs, reduced scope for errors and inconsistencies, and highly reduced settlement times.
Claus Skaaning, CEO, DigiShares, says, “The tokenization industry is still not able to deliver on its promises of reduced fees and increased liquidity, mainly due to the lack of operational security token exchanges on the market. We have partnered with Abacas as we see them as a potential leader in the space and a potential provider of liquidity to the many issuances we expect to facilitate through our platform. Abacas has a strong vision for how liquidity can be provided to assets in the real estate, renewables, and private equity markets that is shared by DigiShares.”
Mr. Skaaning adds, “We will work together with Abacas on developing end-to-end solutions where asset managers can be provided a transparent and secure process of token issuance and subsequent listing on a highly efficient, liquid and transparent exchange such as Abacas, prepared for digital assets from the start.”
Mark VanRoon, co-CEO, AbacasXchange states, “Regulation and compliance remain challenges in the blockchain world as tokenization is rapidly outpacing compliance. As the new order seeks DEFI, our goal is to create a trading venue and partnerships that mitigate many of the current issues facing investors, issuers and regulators in this new paradigm. We are pleased to work with DigiShares as they seek to place a compliance “wrapper” on the companies they tokenize.”
Mark VanRoon, co-CEO, AbacasXchange, added, “Both AX and DigiShares share a common objective – introduction of protocol to instill the tenets of the Customer Protection Rules as asset portability evolves. Without trust and oversight, the mainstream market will not realize the benefits of this new opportunity. We are excited to bring DigiShares tokenized assets into our marketplace and trading venue!”
Asset managers that are interested in digitizing their assets and entering the new world of tokenization are welcome to contact either Mr. Skaaning or Mr. VanRoon for further consultation.
About AbacasXchange
For more information about Abacas, see http://AbacaseXchange.com
About DigiShares
DigiShares provides a white-label platform for issuance and post-issuance management of tokenized securities. It helps with the initial design of the security token such that it fulfills the requirements of the issuer jurisdiction, using the most popular security token protocols and helping ensure that the token may later be traded on forthcoming security token exchanges.
DigiShares is your trusted partner to ensure that your digital assets will be compliant and liquid.
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]]>The post Tokenization Next Steps appeared first on crowdfund.direct.
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The tokenization space is under swift development. Many technology providers have received big investments and the market has recently been predicted to reach $1.5 trillion in 2024 (and this is just for Europe!) (https://dailyhodl.com/2020/03/05/tokenization-in-europe-market-size-to-reach-1-5-trillion-in-2024/). Also, the security token market size has been predicted to grow with 59% CAGR until 2030 (https://www.finyear.com/attachment/1338789/) so there will be enough business for all of us.
What’s driving the market currently? We see a global trend to apply tokenization to the real estate industry as the initial driver. Global real estate is a more valuable asset class than all stocks, shares and securitized debt combined – with a 2017 estimate of $228 trillion. Furthermore, it is a homogenous market that is highly illiquid and plagued by inefficient, cumbersome, paper-based processes for issuance, transfer and trading.
So it is ripe for digitization, securitization and now, tokenization. For this reason, DigiShares has focused its marketing, technology and business development efforts on real estate. See our white paper on real estate tokenization best practices here: https://crowdfund.direct/real-estate-tokenization
DigiShares is actively seeking partnerships with real estate developers interested in white labeling our platform in their respective countries.
Can tokenization provide value with no operational security token exchanges? Indeed, many of the necessary pieces of the puzzle are not yet in place to fully deliver on the value proposition promised by the tokenization industry. We claim that there are still value to be gained from tokenization, such as:
- increased ability to digitize and automate processes related to issuance, transfer and trading,
- increased ability to fractionalize securities to smaller sizes and extend the group of potential target investors,
- increased liquidity through DigiShares internal marketplace for trading within a single project or fund,
- the marketing and business advantage as a first-mover in a new market,
- the increased ease of approaching and attracting international investors (US, Asia, Europe, Latin America),
- and finally being future-proof and prepared to benefit from future security token exchanges and liquidity providers.
How are STOs actually carried out today? Across Europe we have seen most STOs occur in either Germany, Switzerland and the UK. Other much published destinations as Liechtenstein, Estonia, Malta and Gibraltar have actually yet to see their first successful projects. How can STOs occur in Germany where the legal status of tokenized shares is not yet clarified? Easy, legislation is sidetracked by issuing bonds instead of shares. The regulation concerning bonds is less strict than shares and it is easier to define a method for tokenization of bonds that can be approved by regulators. Furthermore, the bonds can be designed to have similar properties as shares such that interest or rent income can be distributed to bond holders on a quarterly basis and such that any value increase in the property can also be distributed to bond holders.
The DigiShares technology supports both bonds and shares, and indeed any other type of security (debt instruments, revenue sharing rights, profit sharing rights, voting rights, etc.).
Due to the corona virus outbreak, we are working from home and will have extra time to prepare future STO projects and consult on the opportunities in the tokenization industry. Feel free to contact our business development department for an initial consultation.
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]]>The post DigiShares Announce a new Version of Software appeared first on crowdfund.direct.
]]>The DigiShares platform can be used in connection with fund-raising but it can also be used in connection with the tokenization of existing funds or companies, in order to create more liquidity among existing investors and make it easier to on-board new investors.
The can be used by investment banks, asset managers, real estate fund managers, etc. to manage and raise capital for multiple projects simultaneously. Each project will have its own URL and its own database of investors. The investor databases can be pooled and shared between projects, if required.
An STO (Security Token Offering) is a capital raise where the ownership of securities (shares, bonds, loans, etc.) are represented as tokens on the blockchain. This results in many benefits in the form of increased efficiency, transparency and security, increased access to investors and liquidity, internationally, as well as a significantly decreased cost of raising capital and subsequent management of the group of tokenized investors. DigiShares’ platform can be used to raise funds for an investment fund, real estate fund, renewables fund, later stage startup, etc. as well as much easier management of a large group of investors.
There is a dashboard for each investor and for the administrator of each STO project. In addition, there is a top-level administrator dashboard managing all the STOs that are issued by the same corporation.
Within the STO dashboard, the administrator may define the security to be tokenized. It can for instance be a share and it is possible to have multiple share classes.
Once the STO has been completed, it is necessary to keep using the platform in order to manage investor communications and corporate actions, such as shareholder meetings and associated votes. In this version, the meeting and voting module has been much improved with the ability to create votes where shares are counted in different manners based on shareholder rights. It is even possible to invite external non-shareholders to participate in votes. Meetings can be created with agendas where individual agenda items may require a vote to be conducted.
It is now possible for investors to send messages to the STO administrator within the platform – directly to the administrator’s inbox, as well as to easily send mass emails to a large number of investors at once.
The document and contract management module has also been extended with the ability to create customized contracts within the system, set variable fields for investor name, number of shares to purchase, date, etc. and specify precisely the subset of investors the contract should be distributed to. This makes it easier to fully automate and optimize the investor onboarding workflow. It is also possible to specify that a document is available for investor review such that the investor can make suggestions and changes in the document.
The internal exchange is now also functional. It allows investors within a single project to trade with each other and hence can provide extra liquidity to investors. This can be highly beneficial in particular in cases where there are many investors in a single project or where investors may be interested in exiting their positions earlier than what is normally possible. It is also possible to invite and white-list new investors into the exchange to trade with existing investors.
Other new functions worth mentioning are: 2 factor authentication and “tell a friend”.
If you are interested in more information or getting a demonstration, please contact DigiShares.
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]]>The post Crypto Deep Dive Interview With Claus Skaaning appeared first on crowdfund.direct.
]]>The real estate industry is on the brink of evolving into a more liquid, global and transparent sector. As mentioned in our article about Real Estate, blockchain technology will be able to enhance multiple facets, ranging from faster transactions, easier ways of documenting and of course, tokenization of real estate assets.
But while plenty of articles describing how blockchain can transform the real estate industry can be found online, there are surprisingly few companies actually trying to implement the technology. Digishares is one of the companies that is spearheading the transition.
Digishares is trying to become the bridge between finance and blockchain, enabling both investors and issuers to connect using their, already live, platform. Digishares focuses mostly on the Real Estate market but is also looking to later expand into renewables, mining, and startup financing. They have developed a software solution that allows whitelisted investors to buy security tokens while helping the issuer with the entire process of tokenizing their assets.
We had the pleasure of interviewing Claus Skaaning, CEO of Digishares. Claus explained his future vision of how blockchain technology can enhance the real estate industry, and we discussed security tokens, and the plans of Digishares in the coming years.
Please tell me a little bit about yourself, how you entered into the blockchain industry, and how and when you founded Digishares.
“I’ve got a PhD in computer science (artificial intelligence) and worked in that field for many years and launched my first company, a company called Dezide which deals with AI solutions for technical diagnostics and troubleshooting. I left this company a few years ago and have been working in a university incubator since then, guiding student and researcher startups on developing their ideas into business. I first got into blockchain around 3 years ago where together with my co-founder Yuriy Zubarovskiy, we launched a company called VentureFusion. This company was essentially a decentralized incubator on the blockchain, a collaboration platform enabling founders to bootstrap their startups by paying contributors with tokenized equity. So we had our first experiences with tokenized securities around 3 years ago when the industry was very young but came into it sideways.
Around 2 years ago we realized that STOs and security tokens would become big and decided to launch DigiShares with a focus on developing software infrastructure for tokenization. We spent around 1,5 years on developing the platform and have now been operational for around 6 months.”
Can you tell me a little bit more about your co-founder and how you met each other?
“My co-founder Yuriy is a very experienced project manager/executive/software developer from St. Petersburg in Russia. We actually met in a project that started around 4 years ago where I engaged Yuriy to develop the solution, but soon after we realized that we shared a vision for a decentralized incubator and bootstrapping platform and embarked on this project as equal partners. We work remotely but have met up several times over the years.”
What is your goal and vision with Digishares?
“The vision with DigiShares is to become a leader in technology for tokenized securities. At this stage, it is not so difficult to be a leader since there are relatively few players so perhaps the real vision should be to _remain_ a leader in the space. We are very much focused on the primary issuance of tokenized securities as well as the ongoing management of a large group of tokenized shareholders/investors in a single project. So we develop solutions for managing all the processes relating to the issuance and as well the ongoing management, including investor registration, communication, voting, e-signing of contracts, paying out of dividends, internal trading among the investors in a single project, etc. The focus is on automating processes so you can just as easily have 10,000 smaller investors in a project rather than 10 big ones – enabling asset managers to democratize access to their funds. We are focused on white-label and primarily work with partners who want to offer this capability to their clients.”
Aren’t you worried that by taking all these different aspects of the business you may become too diversified in a field that already is pretty difficult to master?
“Actually we have a more narrow focus than many of our competitors who (in our view) stretch themselves too thinly over a wide variety of functions and interfaces. We believe we have a balanced focus on primary issuance, ongoing management of a tokenized group of shareholders, as well as being offered as a white-label solution. It is very hard to separate the issuance from the life-cycle management of the tokens. Some companies sell solutions just for the issuance but it leaves the issuer in a lot of trouble without a solution for the on-going management of the tokens and investors.”
How do you think your company fits in both the blockchain and the real estate market?
“We believe in the blockchain fundamentals of democratization, decentralization, transparency, and automation. We strive to fulfill these principles in our solutions. Due to securities regulation, we cannot 100% fulfill them but we do our best. For instance, transactions with tokenized securities cannot be immutable by law, since you may have corporate actions requiring you to forcefully transfer tokens from one investor to another, or to freeze and renew tokens if an investor loses access to his wallet. Governance can be built into the smart contracts such that tokens become self-sufficient and can determine on their own whether they can be transferred to an investor from a specific jurisdiction and of a specific type so a very large percentage of the issuance, transfer and trading processes can be automated and decentralized with blockchain.
In the security token space, there are a few players that try to create ecosystems where they are central players. In my mind, this goes against the vision of the blockchain. When we issue tokens, we use protocols that are as open and flexible as possible and don’t tie us and the issuer into a certain ecosystem. The token needs to be globally compatible and interoperable so it can function outside our platform, be traded on exchanges, etc.”
You have been operational for 6 months now, what are the first findings you have encountered?
“The STO market was initially developing slower than expected but we think it is starting to pick up speed now, at least we are seeing a significant amount of solid leads, and new projects every month. we see a lot of interest from the real estate space, but also in renewables, startup financing, and film production.
In relation to the real estate market, we see this as the biggest driver of the security token market right now. More than 50% of new leads we get in are within real estate.”
Can you tell a bit more about the leads you are receiving? Are those investors, property owners, inquiries, etc.?
It is primarily real estate asset managers and developers. It is a mix between asset managers looking for innovative ways to sell their assets – and developers looking for innovative ways to raise funding for new projects. Most of these already have quite advanced plans developed and are relatively close to launching an STO, including selecting optimal jurisdiction, legal partner, etc.
What are the main areas where you think blockchain can enhance and improve the real estate market?
“Real estate is the biggest homogeneous global market where tokenization can be of value – $228 trillion in total assets. The real estate market shares the value proposition of the overall securities market. We view some of the biggest benefits to real estate tokenization to be the ability to reduce ticket sizes by several factors of magnitude (from EUR 100,000 to EUR 1,000). This is possible through the extreme automation of issuance and post-issuance processes, and it will dramatically increase the group of investors able to invest in a given fund. Another huge benefit is the very significant increase in the liquidity of real estate by making real estate assets tradeable on security token exchanges. This will also increase the amount of money available to invest in real estate, and on the other hand, will make the asset class more interesting for investors.”
I absolutely, and totally agree. It will be an entirely new market, enabling your everyday people to be investors with money they saved up, without the need of banks or lenders. The liquidity will explode and the markets will become even more global. However, before we get to this point there are a lot of issues to solve. How are you trying to persuade people to invest using blockchain?
“We see the main issue as being the same one hindering the overall crypto market – the on-ramp issue. To most people (>95%) having to buy and store crypto tokens in a personal wallet (or with a custodian) is an insurmountable challenge. This really is the main issue for all of us to focus on. It’s not so bad for us as with regular crypto companies, as we permit investors to buy using EUR and USD. And our solution actually allows investors to be “non-tokenized”, i.e., being regular traditional investors without holding a token. But we acknowledge we’re a blockchain company and we are focused on furthering STOs, so we need to develop solutions to the on-ramp issue. It helps to work with custodians who can easily hold investors’ tokens. And the long term”
Aren’t there tons of legal issues?
“On the legal side, it is actually not that complicated. We partner with various legal firms in different jurisdictions and they are responsible for that side, but in reality, structuring a raise in trend will help us out as well with more and more consumer devices integrating crypto wallets and more and more people becoming familiar with these. Europe or the US is relatively straightforward. There are not that many realistic configurations.”
Are you already developing some kind of platform for investors to find a property to invest in?
“We are not currently developing a real estate investment platform as we are focused on being a provider of white-label infrastructure technology for STOs.”
Let’s say 100 people are the owner of a house that generates rent/income. Who decides when the property requires maintenance, what will happen when people move out? This is a subject that I’m personally really interested in!
“The normal solution to the above would be to have a property management company responsible for the day-to-day operations of the property, including all those tasks that you mention, as well as the overall budgeting and financial reporting to investors. The cost of such an operator is factored into the initial STO. With a tokenized solution processes can be automated to such a high degree that it becomes viable to have a high number of investors.”
There are a couple of projects that you have currently launched, more precise the property in New York. How is this project going?
We are still working on preparations for the NY property STO, including the set up of the legal unit for the STO.
How do you see both the blockchain and real estate industry working together in the next 5 years?
“I think a lot of new business models will be tried and tested over the next 5 years combining blockchain and real estate. The real estate industry is characteristic by being made up of a large number of independent but closely interacting players that need to coordinate a lot of transactions both in relation to legal, construction and finance. The blockchain is eminent at this, of course.
We see many potential blockchain use cases within real estate, including logistics optimization, chain of custody paper trail, tracking of building materials over lifetime of buildings, issues management and tracking, micro-transactions for work tasks, IOT tracking of connected devices, documenting and structuring changes and revisions, etc., etc., etc.
We will be focused on using blockchain to optimize the issuance, transfer, and trading of real estate assets and securities, however, and we believe that the industry will see massive changes in this area over the next 5 years. It is our expectation that that majority of listed and unlisted real estate assets will in the future be handled over blockchain technology, and that a much higher percentage of global real estate assets will be listed and tradeable, in a form that is accessible to retail investors.”
How do you see your company evolve in those years? Are there any other markets you want to grow towards?
“We have several exciting initiatives ongoing in the real estate tokenization field, within both issuance and trading, as well as new protocols focused on real estate. Over the next couple of years, DigiShares will have a focus on real estate in particular, but will also be open to projects from other fields, such as renewables, mining and later stage startup financing. We see renewables as a potentially large asset class that will benefit from tokenization. DigiShares has headquarters in Denmark which is a world-leading country in wind production and the location of many wind energy developers. Wind parks are good assets to tokenize to increase liquidity and make them available for retail investors.”
That’s very good to hear Claus, and I believe that there are definitely opportunities in those directions. There is a lot of potential, and it’s awesome to see where you already stand with Digishares and what your future plans are. I want to thank you for this thorough interview, and for the time you have taken out of your busy schedule to answer my questions. We’ll continue to follow your steps and wish you the best of luck!
Want to learn more about Digishares? Read more about their plans on their website. They are also launching a STO. If you are confident in Claus and his company then you might want to read more about this opportunity here.
To get in touch with Claus be sure to find him via the digishares website or via his Linkedin
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