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    Tokenization of Funds shares & bonds

    The tokenization of funds shares and bonds has been a major topic over the last years mainly due to the regulation complexity in regards to such financial products. Nonetheless, it is finally taking shape through a solution called ERC3643.

    The ERC3643 consists in an open source suite of smart contracts enables the issuance, management and transfer of permissioned tokens and is already used by large financial institutions to tokenize real-world assets.

    The ERC3643 allows actors wishing to interact with digital assets to ensure their activities remain compliant with global regulatory requirements. It does this through the use of permissioned tokens and digital identities, i.e. tokens that can only be sent or received based on the verified credentials of investors.

    Types of assets available for tokenization

    • Receivables
    • Debt Restructuring
    • Intellectual Property
    • Future Cash flow
    • Real Estate
    • Fleet- machinery
    • Infrastructure – SRI
    • Arts Collection
    • Financial Instruments and derivatives
    • Private Equity
    • Commodity
    • Litigation Finance
    • Green Energy

    Advantages of the tokens

    Controllable – as the assets are guaranteed by digital identity, the issuer can recover tokens as long as the investor can prove who they say they are.

    Versatile – ERC3643 tokens can represent a multitude of assets including, but not limited to, securities, cryptocurrencies, stablecoins, fiat currencies, commodities and NFTs.

    Interoperable – the standard is also compatible with the well known ERC20 standard and is compatible with any Ethereum Virtual Machine (EVM) compatible blockchain, sidechain or Layer 2 solution, such as Polygon.

    Secure – the standard has also been audited and confirmed as secure by cybersecurity firm Kaspersky.

    In short, the ERC3643 provides actors with everything they need to issue assets compliantly utilising decentralized technologies.

    It enables this through the use of permissioned tokens and digital identities, meaning tokens can only be sent or received based on the verified credentials of investors.

    Step 1 – Setup of the Management Company

    A Management Company is incorporated with the object to create and manage a securitisation SPV.

    Step 2 – Setup of the Securitisation Fund

    A securitisation Fund is setup as an umbrella fund to create segregated compartments to host and invest into the specific private equity funds/deals selected by the Management Company.

    Step 3 – Drafting the Base Memorandum (PPM)

    A Base Private Placement Memorandum will be created and will comprise the general terms and conditions applicable to all the Notes to be created in the future.

    Step 4 – Setup of compartments of the Fund

    An unlimited number of compartments of the securitisation SPV can be created to issue Notes, each linked to a specific private equity fund/deals.

    Step 5 – Drafting of the Final Terms

    The Final Terms applicable to the first compartment will be drafted and will include the description of the first fund, its underlying assets, the coupon (if any), the duration, the type of Notes, the terms, the capital commitments, calls, etc. The PE Fund can be based in Luxembourg or abroad.

    Step 6 – Placement on the Blockchain ERC3643 (Smart Contracts & KYC/AML)

    The Tokens are created as a representation of the Notes and are placed on the Blockchain. They become available for subscription once the KYC/AML procedure have been fulfilled online.

    Creatrust Tokenized Access Platform

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