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Discussion on blockchain and tokenization

23 January 2020

We were delighted to welcome Vlad Centea, CEO of Morfin, for a discussion on blockchain with a focus on tokenization and the digitalization of assets. Morfin is a mobile platform that creates a banking experience for cryptocurrencies, in a compliant space. Notably, users can exchange security tokens as well, in a peer to peer fashion on an asset agnostic marketplace.

According to the company representatives, a growing problem among crypto users is isolation of peer to peer marketplaces and decentralized exchanges from the FIAT economy and FIAT assets. Morfin is bringing FIAT currencies like EUR to its peer to peer virtual assets marketplace.

Blockchain and tokenization, an impact investment tool

According to Vlad, "blockchain is a great solution to address the growing gap between high net worth individuals and big corporations on one hand and the majority of the population and small businesses on the other. It basically allows any kind of companies to fund themselves by tokenizing their shares while also allowing anyone to invest in asset classes that were maybe not available to them in the current system."

He added "This system basically already existed with crowdfunding and venture-capital platform. However, the big difference is that those have no liquidity and the investors are committed until the start-up or company is successful or goes public. With blockchain and tokens, you benefit from a product which is easily tradable on a secondary market. 
In other words, it brings liquidity and hence flexibility to all layers of the economy.
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Regulatory challenges

Aurélien Hollard, partner in charge of investment funds and capital markets, commented "It is important to note that if it is a token linked to securities or a financial instrument then it would fall under the scope of financial regulations. That being said, as the entry point is usually quite low, you are likely to benefit from exemptions under applicable regulations, allowing a lot of flexibility and good time to market for STOs. This is where there could be the real shift in the market."

Aurélia Viémont, counsel in charge of our regulatory practice, shared some insights on the regulatory challenges raised by operations such as Security Token Offerings (STOs) and explained how CMS experts best accompany clients in their tokenization projects.

To conclude the discussion, José Juan Ocaña, associate in the investment funds team, illustrated the full process of an STO.

We would like to thank Vlad for taking the time to share his knowledge, experience and vision with our teams