German Financial Watchdog (BaFin) Approves Fundament’s $280 Million Token Offering
Germany-based end-to-end security issuance solution for asset tokenization, Fundament Group has received approval from the country’s Financial Market Supervisory Authority (BaFin) to distribute real estate bond within the country.
The regulatory approval reportedly will enable the startup company to issue a proposed €250 million ($280 million) bond, that will be backed by a portfolio of properties in major cities across Germany.
Fundament will distribute ownership to investors via a token based on the Ethereum blockchain, thus marking the country’s first-ever real estate backed security token regulated by BaFin. The other approved STO was for a lending startup, Bitbond.
Fundament Group is a German firm that specialises in the tokenization of assets. It is based in Berlin, the group mainly invests in commercial real estate and has holdings in Berlin, Hamburg, Rostock, Jena and Fulda.
The Fundament Real Estate Token upon issuance will inject liquidity into traditionally illiquid real estate investments. Hence, investors can now quickly liquidate investments anytime, on designated secondary markets.
Notably, Fundament’s solution builds a tradable asset class backed by real estate projects since the token is set to be marketable worldwide and independently of banks.
Fundament Group co-founder Florian Glatz said the company was excited to be the first one to get approval from BaFin and was looking forward to start the sales process. He said:
“As the first company to receive approval from the German Financial Market Authority for a blockchain-based real estate bond, we are excited to enter the sales process for the Real Estate Security Token, while already preparing the tokenization of other highly attractive assets.”
Fundament Group brings together a team of experienced experts from different fields such as real estate developers, lawyers, financial and political advisors. The company hopes to offer a linkage between the traditional capital market and virtual blockchain-based financing.
The adoption of this technology will allow investors globally to access the German real estate market through the tokenized bonds. In addition, provisions will be made for investors to decide whether to make deposits and withdrawals in Euros, Dollar, Bitcoin, or Ether.
According to Glatz, IDknow will be used to verify the customer’s identity to ensure the company complies with know-your-customer (KYC) and anti-money-laundering (AML) requirements. Glatz explained that the process will consume at least three minutes on average before one is allowed to buy tokens.
Fundament is one of several firms attempting to tokenize real estate holdings. Although many in the crypto-sphere have argued that most assets are likely to be tokenized, the property is more likely than others to go through the process. This is because unlike various asset classes, real estate has traditionally been hard to trade. Breaking it up into tokens means that this can be done much more easily.
Tokenization is taking root in Europe and as CoinDesk reports, the Malta Financial Services Authority (MFSA) published prospective regulatory guidelines and policies to enable smooth security token offerings in the country.
Do you think the approval of Fundamental’s real estate bond will encourage other blockchain-based companies to come up with similar projects? Let us know in the comments section.