Liechtenstein’s Financial Market Authority has officially approved the first tokenized alternative investment fund. Through security tokens, the fund will provide investors with access to a global real estate portfolio, powered by Ethereum.
The First Regulated, Tokenized Alternative Investment Fund (AIF) Explained
Throughout the past several years, Liechtenstein has built a strong reputation when it comes to the integration of blockchain technology and regulated, real-world assets. The latest headline stems from an AIF which was recently approved by regulatory authorities.
The Financial Market Authority Liechtenstein (FMA) has approved a fully regulated, tokenized real estate fund. The AARGOS Global Real Estate Fund is officially an alternative investment fund (AIF) powered by the Ethereum blockchain.
AARGOS will represent economic interests in a global real estate portfolio. AARGOS security tokens will be issued on Ethereum. Each security token will act as the digital representation of owning one share.
As a financial services provider based in Liechtenstein, Ahead Wealth Solutions is responsible for establishing the fund. Switzerland-based Token Factory is providing the technology for the tokenization process, in collaboration with Bank Frick.
As a regulated security token, compliance is crucial for the success of AARGO. That’s why the token will feature an on-chain whitelist when it comes to investor eligibility.
Only investors added to the whitelist will be able to purchase tokens. In order to be added to the whitelist, investors will have to verify their identity through AML and KYC procedures.
Security Tokens in Liechtenstein Explained
An AIF is an investment vehicle regulated by the European Union (EU). AIFs raise funds from various investors with the end goal of a profitable investment. While Liechtenstein is not a member of the EU, it complies with the necessary regulations, allowing it to participate in the EU market.
While the move constitutes the first AIF to see tokenization, it does not constitute the first time the security token industry has seen implementation in Liechtenstein. In September of 2019, security token platform Neufund received approval from Liechtenstein’s FMA to offer security tokens to retail investors.
Just a few months later, in December, electric bicycle company Greyp announced the close of a successful security token offering through Neufund, which raised €1.4 million. The minimum investment was €100. Neufund said it represents the “first-ever fully compliant, blockchain based Initial Public Offering (IPO) accessible to retail investors”.
What do you think about the first tokenized alternative investment fund? We’d like to know what you think in the comments section below.
Image courtesy of World Atlas.