We are surrounded by small businesses wherever we go. Little did you know that there’s a good chance that more than 1 person has an ownership stake in many of the small- and medium-sized businesses you see. Many businesses operated under limited liability partnerships and in many cases regional “fiat whale” become a partner in small enterprises in order to diversify their income.
For the wealthy, this is a great strategy for building wealth over time because it ensures their eggs aren’t in 1 basket, and given their access to capital at a scale unavailable to the average Joe, they can set terms as per their will. This is one of the main ways wealth becomes concentrated and the problem is that upcoming business owners do not have many ways to access capital in return for equity, and most average Joes don’t have the money to buy a good stake in a small business, let alone multiple ones; this keeps them from diversifying their risk.
Raising Capital
Blockchain technology has given us many benefits, including fractionalization. Budding businesses and startups have been using ICOs to raise capital while distributing their tokens across thousands of people. This has been a revolutionary shift in access to wealth as people did not have to conform to a single person’s demands in return for getting money for building their business. At the same time, average Joes were able to get a piece of the pie of not 1, but many businesses as they were able to buy small amounts of tokens in possible hundreds of ICOs.
ICOs have done a good job at making wealth accessible in the digital realm, but there are hundreds of trillions in real assets and they cannot be turned into utility tokens. For the tokenization of these assets, STOs are required. For the tokenization of any business’s equity, STOs are required.
The STO Hurdle
While utility tokens have been a good way to diversify risk, most projects have had a hard time building a real purpose for them and most investors have a preference for holding equity in a company rather than potentially valuable utility tokens.
This is a problem.
To sell equity, a person has to sell securities and the sale of securities is highly regulated in most countries. Because cryptocurrencies are relatively new, most governments have no clue on how to deal with them and whether or not they should be listed as securities. We can’t leave the situation this way because STOs hold the potential in making sure all businesses that deal with physical assets can raise capital by selling their equity as a security tokens to thousands of people. STOs are similar to ICOs, but instead of selling a utility token, they sell a security that has been tokenized.
STOs face a hurdle simply due to their novelty. The hurdle can be overcome through regulatory approvals and through long-term cooperation with regulatory officials to build a set of laws and regulatory procedures that can bring tokens issued through STOs into the category of official securities.
Launching STOs
Now that the utility token hype has faded, new projects are looking at launching STOs to raise money. While everyone is ready to get money through them, few are actually considering how to make them properly legal.
If each project is to proceed STOs by contacting a legal team and going through a lengthy process to get the approval for an STO, the cost of launching the token sale would become expensive in terms of both capital and time. This is counter-intuitive and simply against what a token sale is meant to provide: easy access to capital in a quick timespan. To make this possible, SMART VALOR is building for STOs what Ethereum built for ICOs.
SMART VALOR is working with Swiss regulators to build a framework that can carve a functional path for the launch of STOs. The platform’s goal is to make it easy to launch STOs while abiding by all laws as dictated by regulators. To do so, it will create a standard protocol for all STOs launched on SMART VALOR and so anyone would be able to easily abide by regulations without having to hire expensive legal teams or having to spend ages learning the legal requirements.
SMART VALOR is launched with the goal of decentralizing access to wealth. Instead of a few “fiat whales” controlling major shares in LLPs across many businesses in a single region, businesses in the real world will be able to offer their own token sale by selling security tokens. These tokens will be backed by the business’s equity and STOs will make it possible for any legitimate business to sell its equity to thousands of people across the world. The businesses will be able to acquire capital without having to succumb to the demands of a single whale and the ownership in equity of many businesses could become easily accessible to people as they could buy small amount of tokens from many STOs.
SMART VALOR makes wealth more accessible by making sure people can raise capital from anyone and by making sure anyone can diversify investment across many small businesses without having a lot of money.
Open for Business
SMART VALOR is designed to tokenize more than just equity as the protocol can tokenize any asset, equity in a business is just 1 type of asset.
In the long-term usage of the platform, any asset could be tokenized and this means average Joes will get access to investments that have had high minimum buy-ins. The most common entry benefit of this would be in assets that require high purchases. Off-plan properties, private equities, and many mining farms as-well-as real mines are some examples of high-yield assets that require a person to dedicate huge sums of money to get access to the asset.
The average Joe who lives in an hourly wage cannot afford this.
Something that anyone can afford, though, is a few security tokens that give access to the equity of the property, mine, or private equity. This opens access to the wealth generated from alternative investments which typically have the highest annual yield when compared to most other forms of investment. It’s not just about having high-yield, however, as the SMART VALOR platform functions as the provider of access to opportunity. We live in a world where wealth dictates the amount of freedom a person has when it comes to pursuing opportunities. Tokenization can make it possible to fractionalize anything and everything so that a person’s wealth is not the deciding factor on what can be invested in.
SMART VALOR streamlines the creation of STOs and is setting the foundation of the legal infrastructure needed to make STOs available to any business owner or asset issuer.
At the same time, sales of security tokens make access to gain wealth from any investment out there a reality for the average Joe. STOs are coming and SMART VALOR is going to make them legally available to all.