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On February 12th, 2020, security token platform Smartlands announced a revision regarding its legal framework. The Liechtenstein Blockchain Act took effect earlier this year, allowing for a number of regulatory benefits related to tokenization. Smartlands has now expanded its legal structure to base future projects on Liechtenstein’s new laws.
Smartlands’ Transition After the Liechtenstein Blockchain Act
Smartlands is a UK-based security token platform designed to facilitate the tokenization of a number of real-world assets. Throughout 2019, the platform experienced notable success through several high-profile projects.
In early 2020, Smartlands announced new plans which involve aligning itself “primarily with the interests of high net-worth individuals, family offices, and institutional investors”. In order to successfully achieve the transition, the company has decided to base future projects in Liechtenstein.
In January of 2020, the Liechtenstein Blockchain Act came into effect. The act features a number of new rules which amend the country’s existing law to allow for rights and assets to be tokenized — without the regulatory uncertainty found in most jurisdictions.
Under previous law — and the majority of existing law throughout the world — tokenization falls under a legally ambiguous area. It frequently involves legal workarounds and the interpretation of legal frameworks written decades before the process of tokenization emerged.
Now however, entrepreneurs and companies can tokenize both rights and assets in a direct and straightforward way. Many anticipate a significant reduction in both cost and time when compared to existing tokenization processes.
Smartlands’ Legal Expansion to Include Liechtenstein Law Explained
As a result of the benefits seen in the new legislation, Smartlands will base future projects on Liechtenstein law. Smartlands CEO Ilia Obraztsov says,
“We remain believers in crowdfunding but dwelling on our past successes is not in Smartlands’ book. We’re excited about the possibilities the Liechtenstein Blockchain Act presents to investors and issuers in regards to direct tokenisation of any asset using blockchain tokens as containers for any assets. Armed with cutting-edge legislation for investment funds, the Liechtenstein jurisdiction is ideal for structuring basically any financial product on blockchain there may be.
One of the first instruments to be leveraged includes a SICAV. In Liechtenstein, an investment company is a Public Limited Company (PLC) which can have variable (SICAV) capital. Investors are able to purchase shares in the PLC, thereby participating in the fund. Obraztsov continued,
“Liechtenstein SICAVs (or open-ended funds) are industry standard and one of the most popular types of funds in the EU. SICAVs can be used as umbrella funds for multiple sub-funds. Such structure provides an efficient and fast way to introduce new investment ideas and opportunities on blockchain in one of the most prestigious fund jurisdictions. It is possible to tokenise any assets with a dedicated sub-fund.”
In 2019, Smartlands successfully tokenized shares of a student residence located in Nottingham, UK. The platform also joined the European Crowdfunding Network (ECN) in an effort to spread the benefits of security tokens across Europe.
Most recently, Smartlands announced the tokenization of the ‘Disruptive Technology Fund’, which aims to raise a total of €8 million. The company says it has also received “promising offers” from a number of existing investment funds looking to integrate blockchain technology.
What do you think about Smartlands’ legal revision to base future projects on Liechtenstein’s laws? Will other security token platforms make a similar transition? We want to know what you think in the comments section below.
Image courtesy of FT Property Listings.