In an industry first, SEFtoken Inc. is planning on launching a new tokenized financial instrument: a “digital covered warrant.” The digital warrant offering will be held on the Securitize platform.
2019 was proclaimed to be the “year of the security token” by many crypto-analysts and SEFtoken Inc. has already entered the new year with their own unique token offering: a digital warrant offering.
SEFtoken is attempting to tokenize an altogether new financial instrument: the covered warrant. A covered warrant is similar to an option where the holder is able to buy or sell the security at a certain price up until a predetermined date.
SEFtoken has said that their digital warrant will be sold via an offering on the Securitize platform and will be supported on the Ethereum blockchain, as per their announcement. The digital warrant will be convertible into equity through Mercari, a licensed exchanged based in Australia.
A New Model?
SEFtoken director Brian Price has said in a statement that:
“The use of the covered warrant structure in the digitized security token era of 2019 introduces a critical structural enhancement to the industry overall and we are pleased to be able to grant potential investors with actual asset ownership.”
Interestingly, the tokenization of covered warrants is a workaround to the current compliance concerns regarding STOs. The sale of tokenized warrants would allow for the issuance and sale of digital securities in jurisdictions where it would presently not be possible: such as, for example, issuing securities in the United States backed by shares in an Australian corporation.
Under current [Australian] legislation the shares themselves cannot be issued in a digital form,” Price said. “Hence the tokenization of the warrant.”
SEFtoken is looking to raise somewhere between $31 million and $125 million for its SEC-compliant digital warrant offering that is exempt from registration under regulations D and S. The offering will be available to accredited investors in the United States.
The move to use Securitize to hold their digital warrant offering is in line with Securitize’s recent success in becoming the de facto platform for security token offerings.
SEFtoken is a company formed in 2018 specializing in licensed exchange infrastructure for tokenized securities. Through their smart contract platform, they create warrants which are convertible to securities. Thus, they are able to compliant in jurisdictions not currently receptive to security token offerings.
What do you think about digital warrant offerings? Do they have staying power in the cryptocurrency space? Let us know your thoughts below.
Image courtesy of SEFToken.
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