Blockchain presents a wealth of opportunities for SMEs, especially through the issuance of digital tokens. This process of 'tokenization' not only simplifies access to capital but also streamlines business transfers and shareholder registry management, explains Claudio Tognella, a decentralized finance expert and head of sales and development at BX Digital.
Artworks, real estate, copyrights, and even company shares – digital tokens (or 'tokens,' see glossary) represent a wide range of assets. For privately held companies, tokenization offers a fresh way to attract investment and raise capital. In Switzerland, companies such as Aktionariat, Tokengate, Taurus, Mt. Pelerin and Daura offer services to help companies get off the ground. The Aktionariat platform, for example, has already raised over CHF 50 million for SMEs. Secondly, platforms such as SDX, and soon BX Digital, enable tokens to be traded on a regulated market.
Beyond improving access to capital, asset digitization simplifies complex processes like business succession and enhances communication between companies and their shareholders. However, by making assets more liquid, it can also introduce certain risks. Claudio Tognella, head of sales and development at BX Digital, a Zurich-based company seeking to position itself in the growing market of tokenized asset transactions, breaks down the potential of this technology for SMEs.
How can SMEs benefit from the tokenization of assets?
Claudio Tognella: Tokenization facilitates, among other things, the allocation of company shares to employees. The digitization process makes the issuance and distribution of shares much faster. This can help with employee retention while also offering an innovative solution for managing business succession. Tokenization allows senior management to become shareholders earlier on and streamlines the transfer of ownership titles later. Many SMEs will also need to modernize their business models by digitizing their operations. The digitization of assets can thus become an additional lever to attract new investors.
What are the benefits for investors?
Tognella: Asset digitization opens up access to the private equity market, which was previously difficult for many investors due to the lengthy and complex process of registering in the shareholder registry of unlisted companies. It also allows for more targeted investments. Investors can, for example, choose to support local businesses or companies that align with their values regarding sustainability, social policies, or governance practices.
How will you assess the risks of issuing SMEs?
Tognella: There are certain requirements to meet, such as maintaining a minimum level of equity and ensuring a sufficient free float of shares. The company must also have a prospectus that has been revised in accordance with legal requirements (FIDLEG). The application for admission to trading must also be made by a lawyer with experience in financial market law (which generally costs several tens of thousands of francs, editor's note). Additionally, the company must enhance its annual reporting through audits. The rules are designed to ensure investor protection while still being applicable to companies the size of SMEs. However, BX Digital will not provide investment advice on companies offered for trading; that responsibility falls to the investor or their advisor.
What new features do digital tokens, like those which will be managed by BX Digital, offer?
Tognella: Digital tokens are more than just financial assets – they are also programmable software. One of the major innovations is the integration of voting rights directly into the tokens, allowing holders to exercise their decision-making power within the company instantly and transparently.
Additionally, tokens can include a range of practical features. The aim is to enable shareholders to identify themselves to the company via their digital wallet, granting them access to specific perks, such as exclusive privileges or discounts.
From a technical perspective, how does the transaction of digitized assets work?
Tognella: Unlike platforms that rely on private ledgers and require investors to purchase stablecoins in advance, our system will operate directly with fiat currency, specifically the Swiss franc. The transfer of funds from the buyer to the seller will be triggered through the Swiss Interbank Clearing System (SIC), which handles Swiss franc transactions.
The transaction will be swift: once both parties have confirmed the exchange, the system retrieves the asset from the seller's wallet and initiates the transfer of funds. After payment is confirmed, the asset is immediately released and transferred to the buyer's wallet via a public blockchain. The entire process takes just 20 to 30 minutes.
What are the risks for SMEs using tokenized assets?
Tognella: Tokenization makes it easier to issue and trade company shares, but it also exposes the company’s value to the ups and downs of supply and demand in the capital markets. This increased visibility comes with new responsibilities around communication and transparency. Private companies will also need to adapt to market fluctuations and be prepared to handle potential media crises.
Biography
Claudio Tognella holds a degree in finance and corporate accounting from the University of St. Gallen. He started his career as a strategy consultant at Monitor, a firm later acquired by Deloitte. Afterward, he spent ten years at Credit Suisse, focusing on corporate development within the wealth management division. Driven by his belief in the disruptive potential of decentralized finance, he joined Daura, Switzerland’s first digital asset platform, in 2019. In 2023, the Zurich native took on the role of head of sales and business development at BX Digital.
Glossary
Token: A digital token or value that represents a real or virtual asset, such as real estate, a piece of art, or a company share.
Tokenization: The process of registering an asset on a token and recording it on the blockchain, allowing it to be traded.
Blockchain: A decentralized and secure computer network that enables the storage, transfer, and tracking of tokens, as well as the automatic execution of transactions.
In discussion
Last modification 02.10.2024
