Ethereum-based FLYT is First Property-backed Security Token in Africa
Blockchain

Ethereum-based FLYT is First Property-backed Security Token in Africa

Last updated on

On February 8th, 2020, Flyt Property Investment announced the launch of Africa’s first-ever security token backed by property. The firm partnered with technology provider Bakari to create FLYT security tokens which are equivalent to one share in the Flyt Hospitality Fund.


The FLYT Security Token in Africa Explained

Based in Cape Town, Flyt Property Investment is bringing South African real estate to the Ethereum blockchain. Its FLYT token is a regulated security token backed by real property.

One FLYT token is representative of one share in the Flyt Hospitality Fund, an investment fund focusing on Section 12J property in South Africa. The fund primarily invests in apartment hotels and hospitality property, which tends to be associated with tourism.

According to the company, the FLYT security token constitutes the first blockchain-based token integrated with an investment fund in a regulatory compliant manner in Africa. Token holders will be able to store the asset themselves in existing Ethereum wallets, as FLYT is ERC-20 compatible.

Flyt Property Investment collaborated with Switzerland-based Bakari for the tokenization process. Bakari provided the technology, and also works with originators, funds, and companies to promote the integration of Distributed Ledger Technology (DLT) throughout financial markets.

Bakari co-founder Ciaran MacDevette says,

“South Africa has a developed, forward-looking financial sector and it is not surprising to see it on a short list of countries embracing next-generation financial technology. We are proud to be working with the Flyt Hospitality Fund, which is leading in innovation by using technology to offer responsible investments directly to individuals.”

Flyt Property Investment managing director Zane De Decker says the fund facilitates both traditional investments and now those powered by emerging technology. De Decker says,

“Our aim is to be ahead of the curve and with that in mind, we are thrilled to present our investors with varied options of entry. An investment into the Flyt Section 12J hospitality fund is available via old-school investment into the fund and now, for those who support the blockchain technology, via the Flyt token.”

In 2009, Section 12J of the Income Tax Act was passed by the South African government. It incentivizes local taxpayers to invest in their communities by offering a tax deduction equal to the amount of their investment. According to its website, the FLYT token is “100% tax deductible”.

Will Ethereum Remain the Leading Blockchain for Security Tokens?

Security tokens have been implemented in a variety of assets, including equity, investment funds, real estate, fine art, and even collectible cars. Despite notable progress throughout 2019, the nascent industry continues to feature many unknown factors, including the go-to blockchain to power the industry in the future.

So far, Ethereum is the clear leader, with a 2019 study showing how 94% of Security Token Offerings (STOs) were powered by Ethereum. Recently however, some companies have turned to Tezos as an alternative. Polymath is also developing Polymesh, a blockchain designed specifically for security tokens.

What do you think about the first real estate in Africa to undergo tokenization? Do you think Ethereum will hold its current position as the go-to blockchain of the security tokens space? We want to know what you think in the comments section below.


Image courtesy of Estate Living.

February 11, 2020

About Author

Avatar

Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions (IoT).