Tokenization of assets: The future of financing

Unlock a new way of financing with all the benefits that Distributed Ledger Technology has to offer through Security Token Offerings.

21-40 is a leading tokenization advisory firm

We help companies from all industries with their tokenization projects – from ideation, design, setup and token sale up to secondary market tradeability.

Tokenization through Security Token Offerings

A well-established path for Security Token Offerings

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Every project we work on is unique and requires a tailored, hands-on approach.

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Tokenization is the process of fractionalizing something of value (e.g. a real world asset, a digital asset, a development project, intellectual property, etc.) into security tokens. Tokenization is typically done through Security Token Offerings.

A security token is a digital asset that qualifies as a financial instrument representing an underlying value. It is essentially used as a digital representation of ownership of assets (e.g. a share in a real estate company) or economic rights (e.g. interest on a debt instrument). Security tokens are compliant with financial laws and regulations, and are fully programmable.

A Security Token Offering (STO) is a process in which security tokens are offered to investors in exchange for money. An offering of a security token entails the issuance (or representation) of a financial instrument in the form of a digital asset in a blockchain environment. 

Security tokens differ from other crypto tokens because they qualify as financial instruments or securities and as such they are subject to securities laws and regulations. 

Security tokens also differ in their purpose and intended use. For example, a cryptocurrency such as Bitcoin is intended to be used as a form of currency or payment method, whereas a security token is intended to be used as an investment or representation of ownership in the same way as a bond, share or certificate.

The beauty of tokenization is that anything of value can be tokenized, from real estate to artworks, carbon credits, investment funds, bonds and anything in between.

Tokenization via STO knows numerous advantages compared to traditional ways of financing, such as: 

  • It’s more efficient: faster and cheaper transactions 
  • There is more transparency: ability to track and prove transfers
  • It offers greater liquidity: increased tradability and broader range of investments 
  • It is financially inclusive: democratization of investments
  • There is a bigger investor base: broader audience and community feeling 
  • There is more flexibility: possibility to design tailor-made financial instruments
  • It offers legal certainty: it falls within the scope of existing regulatory frameworks.

Each STO project has its own timing requirements depending on the project structuring. However, based on our experience, most STO projects are completed within a period of 6 to 12 months.

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