Thanks to blockchain technology, the way we handle assets has changed. By using smart contracts (self-executing programs which “live” in a decentralized system), assets can be represented electronically as tokens on the blockchain (DLT) and therefore pieced together and made (even) easier to handle. Assets become digital assets. We can say goodbye to drawn-out, paper-based processes for managing assets. The scope of application for digital assets ranges from tokenizing shares, to real estate, to physical assets such as diamonds and gold.
Tokenization makes ‘non-bankable assets’ bankable
According to Bloomberg, more than 60% of assets worldwide are currently inaccessible to investors and can therefore not be traded (what are referred to as ‘non-bankable assets’). Tokenization is changing this state of affairs. In this context, the talk is often of a democratization of assets, following the example of the fourth industrial revolution in which the Internet brought about a democratization of information. Not only does the tokenization of assets make market access easier, but the decentralized nature of the DLT infrastructure also brings with it a level of transparency and security that we have not seen previously.
Swiss Trust Chain − the trustworthy Swiss blockchain infrastructure
PostFinance is working on tokenization projects internally on the in-house Swiss Trust Chain DLT infrastructure, for example the Green Coin project as part of the Swiss Climate Challenge. Swiss Trust Chain offers the ideal framework for the efficient and secure implementation of applications in the areas of fintech, insurtech, corporate finance, trade finance and payment. The infrastructure offers good opportunities for scaling, low costs and a simple, user-friendly implementation.
Tradeable SME shares from daura
An exciting use case comes from the digitization of company shares via tokenization. This leads to efficiency gains in the areas of corporate housekeeping and corporate actions. Digital general meetings, digital shareholders’ register, automated dividend distributions, ESOP/PSOP programmes, secondary trade for unlisted shares, capital increases with public offering and succession planning are made much simpler and automated in a transparent, unalterable manner through blockchain technology. Completely updating the shareholders’ registers is a particularly big problem for many SMEs and their fiduciaries as the assignment is not always updated properly. With a blockchain-based digital share solution, you can maintain a seamless transaction register that cannot be altered. PostFinance’s innovation team is working together with daura on tokenizing the shares of Swiss SMEs.
In this context, we have tokenized and digitized the shares of our Tilbago and Ormera partnerships and participations on the Swiss Trust Chain.
Succession planning made easy thanks to smart contracts
The digital share, which was registered on the blockchain, is already offering an ideal response to the question of how to organize and implement optimal succession planning. The target distributions within the company can be implemented efficiently and transparently with payment models, which are clearly regulated in a succession plan, and with the relevant preferred ownership structures. This happens in the following way: the liabilities of the succession plan are guaranteed by a smart contract on the blockchain, whereby the previously digitized shares are transferred quickly and inexpensively when the contract is executed. The business person’s wishes can also be carried out after their death thanks to the smart contract. Shares can then be acquired and the other heirs can receive the corresponding financial compensation. This process takes place without the additional expense of lawyers, notaries or banks and so represents an obvious increase in efficiency in comparison with the current practice. The advantage of this solution is that not only the process can be implemented at an early stage, in advance of a situation such as this, but it also prevents the liquidation of the company. In this way, it is possible to do justice to the wishes of the previous owner while also guaranteeing the continued existence of the company in any scenario in the event of an inheritance dispute.
PostFinance’s innovation team is looking for new or different business models in the development area of digital assets. We believe in open innovation and we work with startups, companies, universities and Universities of Applied Sciences. Find out what our innovation partners can expect from us here. We look forward to working with you.