Amazing Blocks is the first company to tokenize equity according to the Liechtenstein Token Act. With the first tokenized shares of a legal entity in Liechtenstein, history was written on September 21, 2020 when equity tokens for registered shares were generated. This can also be inspected on the Ethereum mainnet. Amazing Blocks offers a software solution to support the tokenization of shares. It leveraged its own software solution, the Tokenpad, to tokenize its own shares. This software could also be applied to tokenized other assets and rights of Liechtenstein legal entities such as participation rights or ownership rights - for example when real-assets such as classic cars, real-estate, machines, watches etc. are tokenized.
Effective on September 21, 2020, the LegalTech and blockchain startup Amazing Blocks AG tokenized its shares in line with the Liechtenstein Token Act (TVTG) as the first in the world to ever do this. These are the first equity tokens for a Liechtenstein legal entity on the Ethereum mainnet. This is set to further establish Liechtenstein as a hub for blockchain. The company’s equity consists of 600 shares of which 400 and 200 are held by two shareholders. This can also be inspected on the Ethereum mainnet. Recently, Amazing Blocks AG was listed in the commercial register of Liechtenstein. The International Token Standardization Association (ITSA) awarded XJJB-H6YC-2 as the International Token Standardization Number (ITIN) to Amazing Block’s tokenized shares. Note that the shares are privately held and are not publicly traded.
As the legal framework enabling this, the Liechtenstein Token Act is frequently described as a major step toward establishing the foundation for the expected mainstream adoption of tokens. Experts refer to the underlying framework as the so-called Token Container Model. Here, tokens function as a container to “package” any kind of legal rights. Liechtenstein is also a member of the EEA (European Economic Area) such that the Liechtenstein Token Act might also help to standardize tokenization processes in Europe. Another substantial point is custody: If specific conditions are met, token holders (that is, shareholders) have the flexibility to choose their preferred custody provider.
Amazing Blocks offers the Tokenpad - a software-as-a-service - that delivers a client-focused solution to support the tokenization of shares and other assets in Liechtenstein. It is a management software for digital legal entities in Liechtenstein, where the entire life cycle is supported (e.g. investor onboarding, tokenizing shares, role assignment etc.). Liechtenstein legal entities can tokenize their equity with this solution themselves. The key user of the software is the Board of Directors which in a legally binding way is executing the tokenization of the shares (or of other assets) with the support of the software.
Sofia Balogianni, CEO of Amazing Blocks described the intention as follows: “The Liechtenstein Token Act establishes an new legal framework aimed to successfully capture the enormous potential of blockchain technology and tokenization. It legally permits tokenization of assets and rights in a quite easy way. We at Amazing Blocks are effectively utilizing this in order to offer benefits such as fundraising-on-the-go to our clients. Further, our clients benefit from a digital, efficient and easy administration of their legal entity, their shareholders and their shareholders’ decisions.” Tokens generated through the Tokenpad of Amazing Blocks are technically building on the ERC20 format but are nevertheless registered shares including the restrictions concerning transferability. The far reaching possibilities of Amazing Block’s offer is shown in Figure 1. Amazing Block’s software could also be applied to tokenized other assets and rights of Liechtenstein legal entities such as participation rights or ownership rights - for example when real-assets such as classic cars, real-estate, watches etc. are tokenized.
Figure 1: Possibilities with the Tokenpad of Amazing Blocks
Being a pioneer and seizing first mover advantage is exciting but also bears a lot of risk. At Amazing Blocks, trust in our model is of utmost importance as we are working closely together with service providers and the authorities in Liechtenstein. The first tokenized shares of the Liechtenstein Token Act can be considered a groundbreaking achievement. Raphael Hess, Blockchain Lead at Amazing Blocks, described this as follows: “Tokenizing the first legal entity and shares according to the Liechtenstein Token Act is a major step toward adopting blockchain as the backbone for the future of finance, law and tech. The tokenization of shares enables substantial benefits to everyone involved. Founding and administering a company has never been this cost and time efficient, as nearly everything can be set up and managed remotely on your computer wherever you are.”
Many people are still sceptical about blockchain technology and tokenization. However, observers of the digital asset markets such as Finoa predict staggering growth to come. They estimate a total volume of tokenized assets of around USD 24 trillion by 2027. Today, we are seeing the beginning of this growth as more and more tokenization possibilities are unlocked - including equity tokens in Liechtenstein. As Deloitte also put it, tokenization will make the financial industry more accessible, cheaper, faster and easier, thereby possibly unlocking trillions of euros in currently illiquid assets and vastly increasing the volume of trade. Most interesting in this regard will be the tokenization of real-assets such as classic cars, real estate, machines, watches and other assets.
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Amazing Blocks offers a software-as-a-service that enables its clients to tokenize shares of a Liechtenstein legal entity. Legal entities can then be founded based on equity tokens and administered with less effort, in a digital way and remotely from anywhere. The best use cases are legal entities for blockchain startups and as a legal wrapper (special purpose vehicle, SPV) for any tokenized asset (e.g. machines, cash flow generating contracts, trademarks, real estate, classic cars). Our goal is to standardize legal entities which then dramatically reduces the cost and time needed to tokenize assets and rights. Digital legal entities are easy to administer (e.g. ownership transfer of equity in a few minutes) as they rely on tokenized shares in line with the Liechtenstein Token Act. Here, our software helps guarantee a high degree of automation and standardization. In a similar way, fundraising and ESOP for your legal entity can be done anytime: A few click in our software and the shares for the new investors or employees are generated and transferred - inline with the legal entity’s articles of association.
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Our software helps to tokenize shares of legal entities in Liechtenstein. But we do not provide custody or token generation services.
Liechtenstein made the first move. With the quite new Token Act, it is now possible to found digital legal entities based on tokenized shares. The Liechtenstein Token Act allows any right or asset to be tokenized such that it can easily be traded or transferred.
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