10 Benefits of Tokenized Asset Offering (TAO): How to Tokenize an Asset
According to Forbes experts, the Tokenized asset offering (TAO) will become the main trend of the cryptocurrency market in 2019, since this type of crowdfunding solves the main problem of ICO - compliance with the law, retaining almost all its advantages. Next, we will look at how this problem was solved and what the trump cards the legalized version of ICO received.
As it turned out, solving the main problem of ICO is quite simple - it is enough to register the issue in accordance with current legislation. In the US, for this you need to apply to the Securities and Exchange Commission (SEC), which operates under the Securities Act of 1933 and "Blue sky laws".
It is also necessary to publish the project of investment proposal - an analogue of the usual white paper, only much more detailed and elaborated. The information in this document is presented not just "to let you know", it is a commitment to investors on the intended use of funds, which failure to comply with is fraught with lawsuits.
However, if tokenize construction, for example, dividing it into 1 million virtual parts (tokens), the input barrier will be reduced by several orders of magnitude. In the case of the Palm Islands - up to $ 14,000.
One can tokenize not only buildings and islands, but also objects of art, planned income, intellectual property, rare cars, credit commitments, construction of factories and even space missions - everything that has value and what can be represented as a digital asset.
Liquidity is the property of assets to be sold in a short time at close to the market price. The higher the rate of sale, the greater the liquidity. In the case of tokenized assets, the sales rate can reach several minutes, since the token is the same cryptocurrency.
If the ownership is presented in the form of a token - it will take several minutes. And all that is needed for the sale of real estate is to open the application in the smartphone and apply for the sale of tokens. Most of all, this is reminiscent of buying and selling currencies in Forex, only tokens can be traded 24/7.
Since the purchase and sale of tokens is not burdened with paperwork, to participate in the transaction it is enough to connect to the network and register on the trading floor (offline operations are also possible, but here you need a computer, laptop, phone or tablet).
It follows from this that Tokenized asset offering gives access to global markets:
Thanks to this and the legislation on securities, which obliges to return the property in case of error or fraud, transactions with tokenized assets can be canceled. In conventional ICO and STO, this function is almost not used, but for
TAO initiatives it is a prerequisite, without which the issue will not be registered with the SEC.
You can return tokens:
In particular, such information is:
After strengthening the regulation of the market, it became much more difficult and more dangerous to create scam projects, so the number of ICOs has drastically decreased.
In addition, information aggregated on blockchain sites is more accurate, it can be collected and processed in real time. Due to this, it is possible to get better analytics and more efficiently respond to the market dynamics - another example of TAO efficiency.
TAO has two alternatives: ICO and IPO. ICO is a simple and fast mechanism for raising funds, while an IPO has high requirements for the financial status of the issuer and can take more than a year. At the same time, the first method is available to almost everyone, even if you are a startup that does not have a single dollar in the account, and the second is only for successful companies.
TAO follows the same scenario as the ICO, except for the need to register with the SEC. Registration usually takes from 3 to 6 months. There are financial requirements, but they are significantly lower than in the IPO. See the table for a full list of differences.
What can be done with ordinary securities? Buy, sell, put in a box and use as a deposit. In other words, the functionality of traditional securities is very limited.
What can be done with digital securities: