By Oliver Smith on 11th March 2019
AltFi sat down with Radoslav Albrecht to hear what it was like working with BaFin to bring the Bitbond token to market.
Today Germany’s first regulated security token, the Bitbond token BB1, goes on sale to the public, as we reported earlier this month.
We spoke with Bitbond CEO Radoslav Albrecht to talk about his experience of working with the German regulator to publish the first security token prospectus in that market.
“Our internal kickoff for this STO [Security Token Offering] was about a year ago,” he told AltFi.
“We drafted a concept of our legal opinion as to how we could bring a security into a token, and show the proof of ownership via that token.”
Most of that year was spent on making sure Bitbond’s debut was sanctioned by BaFin, Germany’s financial regulator, a process which Albrecht says they “invested a lot of time and resources” into.
“They [BaFin] had a lot of technical questions about how the setup would work, but I would definitely say they were open to us.”
Bitbond marks the first of several STOs in Germany currently awaiting approval to launch, Albrecht doesn’t seem to think they’ll see any problems given his experience with BaFin.
“They could have said ‘well you're trying something new and why don't you simply do it the way it's been done for decades’, but they were very open to it, they saw that this technology as something that's important for financial services, and it's going to come anyway.”
BaFin’s approach with Bitbond was to treat it in much the same way as a traditional security, as Albrecht says: “to the regulator it doesn't really matter whether securities are being traded as tokens, or whether securities are being traded in a conventional format, as long as the operator of the exchange complies with the regulatory requirements.”
The test for Bitbond and BaFin starts today as the token goes on sale to the public for the first time.
Bitbond’s core business is SME lending, with loans being executed via the Stellar blockchain network as opposed to payments being made via SWIFT.
Their token will form part of that network now, with investors receiving a 4% annual interest rate, a variable annual bonus and a 10-year redemption period after which Bitbond will repurchase their tokens for €1 per token.
“$3m for our token sale is our internal goal that we at least want to achieve, but ideally it will be more than that,” explained Albrecht.
The company does have a hard cap of $100m as, according to the CEO, “up to that amount we feel comfortable deploying the funds into SME loans, so that we can earn the interest that we pay to the bondholders.”
With the token sale expected to run until 10 May, we’ll have to wait and see how far Albrecht and the Bitbond team get.
Join AltFi for its third annual Alternative Income Forum, exploring closed-ended funds (investment trusts) specialising in generating an income using alternative assets such as specialist finance, P2P lending, direct lending, asset leasing and more. Hear from the leading investors and fund managers in this rapidly growing market.