Vintage luxury cars on a blockchain? Why not. Liechtenstein-based Investment platform CurioInvest and Seychelles-based digital asset exchange MERJ Exchange Ltd. will make it happen. The idea is to launch a token whose value is pegged to collectible luxury cars.
The CT1 token will give investors the chance to buy a stake in a car they could otherwise never afford and open up the asset class to a larger investor base.
“An investor from Uganda can invest in a rare vintage car that is kept in a vault in Stuttgart, tokenized by a company in Liechtenstein, compliant to all relevant laws and regulations,” says Jim Needham, Head of Digital Strategy at MERJ. “It’s a perfect illustration of what this, as a tool, what blockchain technology and distributed ledger technology can do to democratize capital markets.”
500 cars on a blockchain; investors benefit from value appreciation
CurioInvest and MERJ want to bring 500 collectible cars worth over $200 million onto the exchange. The first car to be tokenized will be a $1.1 million Ferrari. Investors only participate in the value appreciation but have no usage rights.
CurioInvest and MERJ expect the car values to appreciate over time. “When you look at fine art or collectible cars, these assets have been traditional safe havens,” said Fernando Verboonen, founder and Chief Executive Officer at CurioInvest. “They’re held by very few and by bringing a different technology, we are making it truly possible for everyone to benefit from the features or traits that define this asset class as a whole.”
According to a Knight Frank report, vintage cars returned more than 330% in the ten years through 2017. CurioInvest will sell every car that appreciates more than 20% in value and pay out profits to the investors.
Security Token with regulatory approval
Although CT1 is pegged to luxury cars, CurioInvest emphasizes that the token is not a stablecoin. Instead, it’s a Security token which has been approved by the financial market authority and also has an International Securities Identification Number (ISIN). Needham explains, “The technology is really only half of the story – the other half is about proper regulation.”
In the future, CurioInvest wants to provide a webcam view of the cars and allow investors to visit the vault in Germany. Moreover, the company intends to launch events where investors can drive comparable cars.
When asked about investment risks, CurioInvest says the value of any investment depends on the market and can go either up or down. But as long as the reselling price of the car is higher than its maintenance cost, there will be a profit. However, there is no guarantee that the desired price can eventually be realized.
CurioInvest itself is a Liechtenstein-registered company with an address in Vaduz, although as per the website, the management team seems to be based out of Zurich, Switzerland. The company is related to Swiss-based Curio Capital and was founded in March 2018.