In April 2020, the Banking and Finance Competence Center at the University of Applied Sciences in St. Gallen, in cooperation with Kaiser Odermatt & Partner and other well-known partners in practice, will start a research project co-financed by Swiss Innovation Agency (Innosuisse) under the title “Independent Evaluation Framework for Security Tokens”.
The aim of this research project is to create more transparency and comparability of security tokens. In addition to the urgently needed standardization in the area of security tokens, a comprehensive and broadly supported certification process is to be developed.
This certification serves companies that finance themselves through the issuance of security tokens, banks that maintain business relationships with issuers, and private and institutional investors. Within the scope of a broad-based investigation, the different needs of all stakeholders (e.g. banks, stock exchanges, regulators, lawyers and notaries, technology companies, associations, issuers, investors and platform providers) will be comprehensively surveyed in order to develop a standardization and certification for security tokens that is recognized by the market.
Security Tokens are clearly distinguishable from utility tokens or ICOs as well as cryptocurrencies such as Bitcoin and Co. In this context, mainly utility tokens (subcategory of ICOs) were issued, which allowed the buyers to use a certain application or platform. In the meantime, there has been a movement away from utility tokens towards security tokens. STOs (Security Token Offerings) represent a regulated version of financing. Here, investors invest in digital assets that are held on a blockchain in a decentralized and forgery-proof manner. The blockchain technology thus offers the possibility of “tokenizing” any “classic” assets and making them tradable. For SMEs in particular, this digital form of financing could provide simplified and more efficient access to the capital markets in the future. From the investor’s perspective, security tokens offer a new or extended access to various asset classes.
The standardization and certification resulting from the research project should help to create transparency and trust to further advance the promising market for security tokens.
Kaiser Odermatt & Partner is part of this research team, which consists of several practice partners with profound experience and expertise in the field of blockchain and security tokens.