STO VS. STD — The Winner Is…
We hope this short article will educate & inform you about Security Token Offerings (STO) and help you avoid any embarrassing conversations by confusing them with STDs.
Security Tokens are blockchain-based financial securities, like shares or equity in traditional corporations, startups, venture funds, gold funds, and unique assets like art or even shares in an athlete’s future earnings (Spencer Dinwiddie — NBA). The potential to digitize (tokenize) ownership of almost any asset will enable new mechanisms for democratizing access to institutional quality investments previously unavailable to the average person. Security Tokens have built-in investor protections, rights, and obligations utilizing a smart contract written directly into the token. Real estate is poised to be the biggest asset class ready to be tokenized.
A ‘token’ is a digital symbol of ownership. On blockchain, you own a token in the same way you own the deed (or title) to a house or car. With the deed, the piece of paper has no value; it represents the value. It is symbolizing ownership of the house or car. Extending the analogy further, the deed to the house is registered with a government or private authority to show chain of title and confirm ownership.
A blockchain is a distributed ledger, which is basically a growing list of records, called blocks, that are linked together using cryptography. Each block contains a “cryptographic hash (mathematical algorithm) of the previous block, combined with a timestamp, and the transaction data. A Distributed Ledger is possible because the worldwide nature of the internet allows a consensus of replicated, shared, and synchronized digital data geographically spread across multiple computers, sites, and countries.
The Token is, in essence, the “deed” or “title” digitally recorded onto the blockchain. By design, if a blockchain is changed or modified, it shows up throughout the distributed ledger network. Security, stability, and transparency.
Tokenization Creates Fractional Ownership
Tokenization is the process of creating fractional ownership of an asset. The tokens can convey direct ownership in the asset; or equity ownership of a company/partnership/LLC/fund that owns the asset(s); debt secured by the asset(s); or any type of derivative investment product such as the only the income (cash flow) or value increase (appreciation) on a real estate investment.
The really cool part about Tokenization is that it is subject to limitations of the issuer; each ownership piece can be further divided, sold peer-to-peer or listed on a secondary exchange, or even pledged as collateral. It opens up a whole new world of investment, which will eventually create the opportunity for ownership of high-quality assets, previously reserved for the big guys, to every individual investor in the world. Security Tokens will democratize investing and create wealth on an unheard-of scale.
Security Tokens Are Regulated Securities
Security Tokens are different from the more commonly known ICO (Initial Coin Offering) in that they are regulated by the governing authorities where they are headquartered or sold.
Andrew Bull, founding partner of Bull Blockchain Law LLC, says: “Security Token Offerings differ from Initial Coin Offerings in that security tokens are either registered with a Securities Governing Authority in the jurisdiction where the tokens are offered, or the tokens are filed under an exemption, which typically makes the tokens restricted securities.”
Security Tokens issued or promoted to United States investors must comply with the Securities Exchange Commission (SEC) regulations, and you will more than likely need to be an accredited investor if they are offered under the Regulation D exemptions. If offered to foreign investors, the token would have to comply with Regulation S. There may be opportunities for non-accredited investors to get in on the action if a sponsor issued a Reg A+. All of these offerings have to comply with “Know Your Customer (KYC) and Anti Money Laundering laws (AML) in almost any jurisdiction.
Security Tokens Are The Future
Concordia Equity Partners believes that Security Tokens and blockchain technology are the future of commercial real estate investment. It is why we will be launching our new Essential Business Net Lease fund as a Security Token Offering for both US and foreign investors by the end of summer 2020.
Liberty Real Estate Fund LLC (LibertyFund.io) is an enhanced way to invest in the cash flow and stability of high quality commercial real estate with the combined advantages of liquidity and security of blockchain technology.
LibertyFund.io is a real estate fund engineered for investors to achieve: geographic diversification, industry diversification, and tenant credit strength. Our portfolio of Single-Tenant Net-Lease properties is constructed with brand name Essential Businesses, operating in high growth markets throughout the United States.
Net Lease assets have long term contractual rents backed by creditworthy corporations, multi-unit franchise operators, private equity funds, and high net worth individuals. The cash flows and risk profiles are similar to holding a portfolio of superb yield bonds combined with the tax benefits of real estate. These are hard assets with intrinsic value.
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The Chicago Blockchain Real Estate Collective is hosted by: https://www.meetup.com/Chicago-Blockchain-Real-Estate-Collective
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Michael Flight is the CEO of Liberty Real Estate Fund LLC, the World’s First Net Lease Security Token Fund. The Liberty-RE token is a net leased property fund curated to create a conservative, safe haven portfolio of long term, Single-Tenant Net-Leased properties designed for geographic diversification, tenant credit diversification and industry diversification.
Michael is a real estate entrepreneur and Security Token evangelist who is an expert in retail real estate (Shopping Centers and Single-Tenant Net-Leased) investment, redevelopment and real estate on the blockchain. He has an extensive record of partnering with some of the world’s most well-known banks, insurance companies, hedge funds and institutional investors in many successful projects. Michael has been active in commercial real estate over the past 34 years. Michael has been featured on The Real Estate Guys Radio Show, Cashflow Ninja, Bitcoin.com, Cash Flow Connections and Buck Joffrey’s Wealth Formula podcasts. Michael is also a well-known speaker at FreedomFest, Investor Summit at Sea, the Intelligent Investors Real Estate Conference, the LA Blockchain Summit, and the Liberland 5th Anniversary Conference. He is a published author having been recently, and was featured in the #1 Amazon bestselling book: DESIRE, DISCIPLINE & DETERMINATION (2019). He is currently finishing a book on the benefits of Single-Tenant Net-Lease (STNL) real estate investments. Michael is co-host of the Nothing But Net podcast — an educational podcast about Net Leased (“NNN”) properties.
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Liberty Real Estate Fund LLC is The World’s First Single-Tenant Net-Lease Security Token Fund, joining 30 plus years of institutional real estate investment experience with blockchain technology to deliver very stable, diversified, tax efficient returns combined with liquidity, security and transparency.
Liberty is a real estate investment fund that acquires Single-Tenant Net-Leased (NNN) essential business retail, auto service and medical properties in the United States. It is designed for investors to achieve: Geographic Diversification; Industry Diversification; Tenant Credit Strength and is built with hard assets that have intrinsic value. Our portfolio of Net Lease properties is constructed with brand name businesses operating in high growth markets throughout the United States. These Net Lease assets have long term contractual rents backed by excellent brand name, well capitalized companies.
The portfolio has been specifically designed to provide stable, recession-resistant income combined with inflation protected wealth preservation and equity growth.
Liberty Fund was founded by an experienced real estate team who believes that Security Tokens are superior to traditional investment methods because investors will benefit from the liquidity, cost efficiency and transparency provided by the blockchain.