Berlin blockchain company Bitbond announced the first Security Token Offering (STO) with a securities prospectus approved by BaFin, Germany’s financial regulator. Bitbond is the first in Germany to issue a comprehensively regulated security token.
Unlike 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,” said Radoslav Albrecht, founder and CEO of Bitbond, in a statement.
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.
The proceeds from the STO will be used for the fintech’s core business of lending to small businesses and freelancers, and to further develop the global lending platform. Founded in 2013, Bitbond conducts a credit check on every borrower via its proprietary scoring technology. Over the past six years, it’s generated over $15 million worth of SME loans, funded in over 80 different countries.