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There is a multi-trillion-dollar world out there.

Illiquid, privately held assets ready to be tokenized on the blockchain. Security tokens are the most logical connection between classic finance and blockchain, giving benefits to both.

Even if the security token offering (STO) market is still young and in the early stages of development, it shows potential in the entrepreneurial and finance scene. Some companies, banks, and institutions are already pioneering new financial products.

This decade will certainly see the rise of this unique type of token, which represents one of the most promising applications of blockchain technology yet.

Let’s look at some of the most significant examples within this industry to understand what has already been done. 

Gold producer announces private offering of security token

Avana Resources has launched a $20 million security token offering aimed at accelerating and expanding its production and exploration capabilities.

The company has active mining operations in Kenya, with a gold ore processing capacity of 12 tons per hour. The funds raised will enable it to increase production and complete geophysical exploration and mining programs in Kenya, Madagascar, and Mozambique. The team is also aware of other metals and minerals in all locations where it is active, thanks to geological surveys and exploration work conducted to date.

Token holders have the opportunity to benefit from significant opportunities related to these minerals, and will have Token holders will be entitled to 30 percent of Avana Resources’ net profits globally.

Hong Kong exchange OSL sold security tokens to institutional investors

OSL Digital Securities Limited (OSL) announced that it is the first digital asset broker to distribute security tokens to professional investors in Hong Kong in a private security tokens offering (STO).

The STO represents an interesting “proof-of-concept” for investing in regulated digital assets.

It opens the door to a new market for the issuance and distribution of tokenized securities, as well as setting a standard for STOs in Hong Kong.

Each security token represents a $10,000 bond with a fixed-rate coupon and a bonus coupon linked to Bitcoin’s price performance, valid for three months; the tokens are based on the Ethereum blockchain.
Institutional buyers also include Head & Shoulders Financial Group, China Fortune Financial Group Ltd., Volmart and Monmonkey Group Asset Management.

BME, BBVA and IDB are issuing the first regulated bond in Spain registered on blockchain.

We expect DLT technologies to reduce barriers and issuance costs so significantly that they will lead to an expansion of capital markets, making them accessible to small investors” said Arias Hofman, CEO of IDB Lab.

Since February 2022, BME, BBVA, IDB and ioBuilders have been working on this project, in which the development of a blockchain platform enables the registration, secondary market trading and lifecycle management of a bond issued in a regulated market.

The operation used smart contracts for the distribution, buying and selling and payment of the bonds, as well as for corporate events, with BBVA tokenized e-money for liquidity management over the life of the bonds.

UK studies blockchain-based government bonds

New UK Finance Minister Nadhim Zahawi said the government will explore “distributed ledger” technologies for government bonds.

The plans were first anticipated in April, when the U.K. published papers on the use of DLT to regulate bonds and stablecoins.

Bonds are one of the main asset classes in which DLT is used. And this applies not only to regular bonds, but also to green bonds, where the use of bond funds can be tracked and verified.

The UK would not be the first to use DLT technology for government debt, but it would be the first among the G20 or, if you will, the G7. Both Thailand and the Philippines have already issued blockchain-based bonds, in both cases for bonds for investors issued during 2020. Poland has used the technology to track the issuance of some of its treasury bonds. G20 member Korea has explored blockchain bonds, as has Colombia.

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