Digital Ownership of Asset-Backed Securities.
A security token offering (“STO”) is commonly referred to as the offering and sale of tokenized digital digital assets by an “Issuer” that are classified as securities under pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934 (collectively the “Securities Act”).
A security token is a digital representation of a traditionally-defined “security” (as defined below) in which the Issuer maintains that the tokens exist on a distributed ledger (i.e. blockchain) and take the form anything ranging from the benefit of using/accessing a software platform (e.g. a “utility token”), ownership of tangible or intangible assets (commonly referred to as “asset-backed tokens”), financial debt instruments (debt security tokens or “crypto bonds”), and even an equitable ownership stake in a business venture (equity tokens).
By embracing the wide-spread phenomenon of “tokenization,” investments in the following commodities and assets are no longer reserved for the super rich- as security tokens promote fractional ownership across all industries:
- Residential and commercial real estate
- Stocks, bonds, debentures, and passive income (i.e. dividends)
- Diamonds or precious metals;
- Luxury automobiles and timeless works of fine art; and
- Ownership interests in a corporate vehicle such as an LLC, S-Corp, or C-Corp;
We Are With You the Entire Way
The Petros Law Group provides extensive legal counsel to business organizations focusing on raising capital, building operational infrastructure, and developing their blockchain-based product before entering the marketplace. When seeking to raise capital through token generation events such as an STO, our firm is dedicated to working closely with our clients from inception to completion. Among other services, we readily provide:
Guidance throughout the security token offering process to ensure full compliance with all rules and regulations, state and federal, when raising capital through the issuance of security token offering;
Preparation of all necessary documents on behalf of issuers of tokenized securities in order to mitigate potential violations of U.S. Securities Laws- specifically, prepare and file for the appropriate exemption to sell securities under the Securities Act, including: (i) Regulation D (506b/ 506c), (ii) Regulation S, (iii) Regulation A (Tier 1 and/or Tier 2), and (iv) Regulation CF under the JOBS Act.
Formation of private offerings of cryptocurrency investment trusts and funds, as well as other traditional investment vehicles, in compliance Rule 506 of the Securities Act.
Structuring and forming of hedge funds and hedge fund offering documents, including private offering memorandum and subscription agreements.
Performance of in-depth due diligence and analysis to determine a project’s state of compliance with relevant international and domestic laws, regulations, and requirements.
Preparation of legal memoranda to establish securities classification and compliance as defined by securities laws in the United States, Hong-Kong, Australia, Singapore, and Korea- as required by all exchanges during the token listing application process.
Efficiently procure necessary state and federal licenses required by clients engaging in broker-dealer activities and operating money services businesses.