Last week, Neufund, a blockchain based platform for the issuance of security tokens, announced the very first companies were preparing to tokenize their equity using their service. These “equity token offerings” or “ETOs”, as referenced by Neufund, were said to be compliant within German securities law – an important qualification.
Globally, there are numerous platforms looking to launch security token offerings. In the US, there is tZero, Templum, StartEngine, OpenFinancial and several more. The concept is not unique but still very much at the beginning stages. In fact, we are pretty certain all regulated exchanges have reviewed distributed ledger technology and the ASX in Australia, for one, announced in 2017 its intent to migrate to a blockchain based exchange platform – replacing a nearly 30 year old system. Many blockchain advocates believe it is inevitable that all securities transactions will take place on the blockchain.
In 2017, Neufund reportedly raised $11.6 million in a pre-sale backed by some big names, including; Philipp Freise (Kohlberg Kravis Roberts & Co), Michael Jackson (Mangrove Capital), the VC fund Atlantic Labs, and crypto influencers Max Kordek (Lisk) and Fabian Vogelsteller (Ethereum Mist, ERC20). The funding provided the capital necessary to execute on their mission of building a blockchain protocol for securities issuance and tokenization.
In an update posted on their site today, Neufund outlined the process of listing a security token on their platform. If you are interested, you may read all about it here.
Neufund co-founder and CEO Zoe Adamovicz has been a vocal proponent of the benefits of distributed ledger technology. Following the announcement of the first companies listing on Neufund we decided to ask Adamovicz a few additional questions.
In Germany, BaFin is the financial regulator that financial services firm must work with to issue securities. BaFin’s leadership has recently gone on the record as being quite positive when it comes to blockchain in general but regarding Bitcoin and crypto – not so much. We asked Adamovicz how long it took for BaFin to green-light their platform. Adamovicz explained;
“Many people aren’t aware of how BaFin operates and I believe it’s important to shortly explain it here. The German financial authority is always open to start a formal dialogue with companies where they can inform about developments in the projects but it will never give a formal “green light”. BaFin is, however, obligated to give a “red light” to projects which they find in any way unregulated. [Regarding] Neufund, we are sending updates about our progress to BaFin since nearly two years now and we never got a “red light” which gives us additional protection for the future,” said Adamovicz.
She added that only after approvals of the prospectuses of the first public offerings on their platform we they then be able to give the exact dates and numbers of the offerings. Adamovicz said the Investment Prospectuses are being reviewed in a regular way, which shouldn’t take longer than 6 weeks.
Neufund’s first round of issuers is pretty impressive. The high profile electric car company Uniti is scheduled to debut on Neufund. So how did Neufund make contact with the companies that are expected to list on their platform?
“We’ve been approached by many companies looking for a better way to fundraise. Many as in hundreds. Last year we enabled our pre-registration which let companies send their applications and from those [submissions] we have decided to pursue the 10 strongest candidates to present on the 20th of July.”
She said most of the questions from these companies focused on their legal and technical framework.
Malta has emerged as a blockchain hotspot in Europe. Neufund announced in April that it would will establish a “strong presence” in Malta to support its ecosystem – joining several other high profile blockchain based firms. Adamovicz clarified that Malta did not play a roll in this first round of ETOs;
“As for now all of our equity token offerings will be conducted under German jurisdiction. Our involvement in Maltese blockchain ecosystem does not influence this specific announcement, we will however soon announce some news regarding our activities in Malta which will deliver yet another added value to the community of our investors and companies.”
Neufund is definitely a security token platform to watch. If everything goes according to plan, Neufund will surely burnish Germany’s innovation and blockchain credibility. We will keep you posted.