Bank Frick and Swiss-based Token Factory have received FMA authorization for a tokenized real estate fund. We will likely see more projects like this in the near future.
The Financial Market Authority Liechtenstein (FMA) has authorized a tokenized real estate fund which was co-developed by Bank Frick and Zug-based Token Factory. The FMA has classified the fund as an Alternative Investment Fund (AIF).
Token Factory was the first to tokenize a property in Switzerland in early 2019, using its blockimmo tokenization platform. Blockimmo can not only tokenize real estate but also various other asset classes.
The cooperation with Bank Frick has now led to the first tokenized real estate fund accepted by Liechtenstein’s FMA. However, it is not the first tokenized fund in Europe, as falsely reported by various media outlets. Berlin-based Fundament Securities, for example, has already launched a tokenized real estate fund approved by the German Bafin last year.
Cooperation between Token Factory and Bank Frick
Raphael Haldner, Head Fund and Capital Markets of Bank Frick, says, “As the preferred point of contact for Blockchain Banking, we were again able to demonstrate the possibilities of Blockchain technology with the tokenization of a regulated investment fund. The issuance of digital, Blockchain-based fund shares leads to greater efficiency and a higher degree of automation in the transmission process.”
Haldner explained he wants to take this project one step further to strengthen Bank Frick’s service offering in the issuing business. He believes the cooperation with Token Factory sets an important milestone for future developments.
“While evaluating possible technology partners, we were impressed by Token Factory’s team, their track record, and their far-sighted and understandable tokenization solution,” says Haldner.
Token Factory’s solution allows flexibility
Bastiaan Don, Managing Director of Token Factory, explains Token Factory’s tokenization solution, “Our tokenization solution is based on standard protocols like ERC20 and an open Blockchain (Ethereum). This allows our customers to maximize the potential of Blockchain technology without having to commit to a central technology partner or proprietary solution.”
Token Factory transfers the ownership of the smart contracts to its clients and instructs them on how to use the solution independently in the future. Additionally, Token Factory not only implements its solution on behalf of its customers but also shares its know-how to enable an ongoing operation without further servicing.
It also integrates into existing applications, for example, a CRM system and Anti Money Laundering (AML) and Know-Your-Customer (KYC) applications. The security token is linked to an on-chain whitelist, meaning only investors who have identified themselves via AML/KYC will be able to invest, hold or trade the token.
While Token Factory’s blockchain solution will provide the basis for rule enforcement and documentation of ownership rights, Bank Frick manages the whitelist and guides the investors through the onboarding process.
In the future, we will likely see more cooperation between tokenization providers and banks to tokenize assets – not only real estate but other asset classes as well. It’s not surprising that tech-savvy Bank Frick is again pioneering in this space but other banks will follow. Especially those that do not have any internal blockchain know-how will in future increasingly look for technology partners.