Tokenomics – Developing a new safe asset class
Asset tokenization develops to be one of the few cardinal applications and use cases for blockchain technology. Digital tokens or coins have the purpose to represent real-world assets. This includes tangible assets like real estate, gold and silver, but also intangible assets like intellectual property rights.
#Thailand‘s new #SapIngSith legislation allows the merging of #PropTech and #FinTech innovations by the creation of a Sap-Ing-Sith Token which complies with #SEC and foreigner legislation requirements in the land of smile. Would you like to know more? #PUGNATORIUS #tokenization
— Bangkok Lawyer (@bangkoklawyer) September 21, 2019
Asset-backed tokens: The tokenization markets and industries are international and the terminology is inconsistent and sometimes intentionally confusing. The tokenization of assets is wrongly put at an equal level with asset-backed tokens. The tokenization of real estate does not mean fractional land ownership. The term “indirect fragmented equity ownership stake” sounds formal and awkward, but gives a much better impression of the tokenization structure.
Fractional ownership: Tokenization can be applied to fractional ownership property developments. Under these “pay as you play” structures, the investor receives some form of fractional ownership rights for a fractional period. The investment is done with unconnected sharing partners, without mutual financial risks to combining resources by collectively own condominiums or other high-value real estates.
St. Regis, Aspen: Tokenization structures which have been successfully accomplished in the U.S. markets, can’t be copied one-to-one to other jurisdictions. The Aspen project, which allowed a trophy real estate asset in Colorado, USA to be crowdfinanced under U.S. regulations, has to be significantly adjusted to meet Thailand’s foreigner legislation, crypto regulations, and market requirements.
Liechtenstein Blockchain Act: Under the new legislation coming into effect in Liechtenstein in January 2020, a token container modell is introduced, to be maintained by trusted third parties. Disposal over the token results in disposal over the tokenized rights (not over the asset itself). Thailand does not have similar legislation yet.
Would you like to know more? The law firm is available to present its sophisticated concept of real estate tokenization to Thailand’s top property development firms.
Seven aspects of the tokenization of Thai assets
Tokenization can come in several layers. Under a perfect scenario, the token represents the asset, can be easily acquired and freely traded. The token holder benefits from all asset cash flows and asset appreciations. The reality is different. Seven main aspects should be carefully developed and defined:
#1. Representation of the physical assets themselves: For what does the token really stand? Does it represent full ownership rights or something different?
#2. Asset-backed token: How far is the token asset-backed? Does it provide legal title or synthetic representation only? How far is the structure comparable with milestone transactions in order legislations.
— Brickblock (@brickblock_io) April 25, 2018
#3. Corporate structure: How to set-up the Thai and foreign legal entities for a solid tokenization project? Which corporate risks are shifted to the tokenholder?
#4. Thailand’s foreigner legislation: How can the foreigner legislation be implemented in Thailand’s tokenomics? Which restrictions apply for the property ownership, the shareholding and else?
#5. Thai REIT legislation: How to distinguish from the real estate investment trust and its special legislation? What are the elements and implications of crowdfunding?
#6. Token offerings: How can the token be marketed and sold to the public? Private sale, digital asset transaction, listing at an existing exchange, handling similar to an IPO, or shifting of the project to abroad? Is the token qualified as a utility token or security token? What are the consequences?
#7. Trophy asset: what are the legal and the practical requirements for the asset that should be tokenized? Which restructuring is required before the whole project can be started?
The devil is in the detail. PUGNATORIUS Ltd. offers to present the law firm’s comprehensive concept for Thai property developers, its proposal for a work program and project management. and it’s deal team to Thailand’s property developers.
Professional services in Thailand’s Fin-Tech sector
PUGNATORIUS Ltd. advises how to adjust international tokenization structures to Thailand’s complex regulatory framework of foreigner legislation, digital asset regulations, securities regulations, and civil law legislation.
The law firm advises and assists in the utilization of Thai real estate in international tokenization projects and in the marketing of tokenization projects for foreign assets in Thailand.
With respect to Thailand’s fintech and financial service sector, the law firm offers mainly these seven legal and tax services:
- Thai crypto-compliant company formations
- Regulatory-avoiding and tax-efficient cross-border structuring
- Digital asset and financial services licensing
- Blockchain and ICO/STO advisory services
- Thai and cross-border tax structuring
- Cryptocurrency transaction support services
- Legal opinions and professional statements