The Spanish financial landscape is evolving rapidly following the 2023 reform of the Securities Market Law, paving the way for native on-chain issuance of capital and debt under the supervision of the financial supervisor, CNMV. This regulatory advancement allows companies to issue capital directly on blockchain, simplifying processes and unlocking new opportunities within the EU market, particularly for private capital firms.
What is on-chain native issuance?
On-chain native issuance to shares or debt that a company issues directly on blockchain. The key is that the token itself is the asset, not just a blockchain representation of an asset that must be issued through traditional means. The supervision of the CNMV provides full regulatory validity, including legal protections for investors.
Token City is at the forefront of this transformation, having facilitated the first regulated tokenized debt issuance in Spain with Dianelum and the first tokenized capital issuance with Beself Brands. These milestones highlight the potential of on-chain native issuance, enabled by Spain's pioneering regulation, a game-changer for private companies issuing assets to raise funds or finance their projects.
Here are four key benefits:
Significantly More Efficient Asset Issuance and Transmission
The traditional issuance of capital or debt for private companies involves a complex and costly process, requiring multiple in-person procedures, the involvement of placement partners, and other barriers that limit issuance to medium or large-sized companies. Secondary transfer of these assets traditionally requires listing on specialized exchanges or a cumbersome document management process between the parties. Today, native on-chain issuance enables a predominantly digital process accessible to companies of any size, allowing assets to be transferred easily to any person or company.
Cost Efficiency for Multiple Issuances
Traditional issuance of capital or debt is notoriously expensive due to the need for intermediaries and numerous manual or in-person processes. In contrast, consecutive issuances of capital or debt on blockchain dilute the cost of the necessary technological infrastructure, providing a highly cost-efficient way to issue shares or debt directly into the investor's wallet.
Enhanced Compliance and Trust
Native on-chain issuance ensures immutable and auditable records on the blockchain. A specific entity for regulated tokenized assets (ERIR) simplifies compliance and guarantees the integrity of the issuance. The ERIR is also supervised by the CNMV, allowing investors to operate under regulatory protection.
Secondary Trading
Both Spanish law and the current EU regulatory framework enable secondary trading of tokenized securities. Token City is in the process of launching its Trading and Settlement System for tokenized assets in the EU, which will enable investors to divest or increase their positions in the assets they hold. This marks a significant shift in the private capital sector, which has historically been extremely illiquid.
In Conclusion:
Native issuance of capital and debt is already transforming how private companies access capital, replacing outdated and costly processes with efficient and fully compliant solutions. By simplifying issuance, reducing costs, ensuring compliance, and opening doors to investors, this innovation empowers private companies to continue thriving.
Read about the first on-chain native issuance in Spain.
Enter the new tokenized economy
Token City is the ultimate bridge to the tokenized economy (tEconomy), in which tokenized companies (tEnterprises) create their cryptoasset markets (tMarkets), open to global investors (tCitizens).
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