In contrast to ICOs, the securities prospectus for the token-based bond gives investors unprecedented transparency and comprehensively documents their rights and the terms of the offer. At the same time, the offer is subject to regulatory control. Bitbond has been approved as an asset broker under the German Banking Act for its blockchain-based lending business and is the first financial services institution of this type to be supervised by BaFin.
"We are the first regulated blockchain company to set new standards. It is important for us to show the investors who trust our platform that we act according to transparent rules," says Radoslav Albrecht, founder and CEO of Bitbond. According to Bitbond, the industry trend is moving towards tokens being structured as securities.
Unlike utility tokens that do not give rise to any legal payment claims for investors, security tokens are structured as securities, which regulates investors' rights. In the case of Bitbond, investors participate in the success of the company via an interest claim. "We hope that Security Tokens will continue to spread. They enable both private and professional investors to invest in early-stage companies and provide start-ups with access to the capital markets," says Albrecht. The approval of the offer shows that STOs are well possible in Germany under German law.
Bitbond Token (BB1) has a nominal value of one euro and can be purchased by interested investors. The tokens enable investors to participate in the success of the blockchain company and in the loans brokered by Bitbond. The tokens are tradable and can be bought and sold on crypto exchanges if the regulatory requirements for this are fulfilled.
The proceeds from the STO serve two purposes: First, Bitbond will use them for its core business of lending to small businesses and freelancers. Second, Bitbond is further developing its global lending platform. This also includes the advancement of innovations in the payments and credit scoring area. In doing so, the Berlin Fintech company promotes financial inclusion around the globe.