Blockchain technology continues to make waves around the world. And today, the world has witnessed what many believe to be the first major step towards a new way for startups to access capital.
According to a press release by Andriotto Financial Services, dated January 29th, 2020, the country of Switzerland has recently approved OverFuture SA’s incorporation by using an IPO of tokenized shares stored directly on the blockchain.
For many, the approval is considered as the first Swiss-compliant digitized initial public offering (IPO) of a company’s ordinary shares.
And along with it, Swiss companies will now be able to publicly store their ordinary class-A shares on the blockchain, giving them the ability to launch IPOs (initial public offerings) and control their secondary market transactions, all without the involvement of any third-party intermediaries, such as a bank or any other type of public institution.
The Revolution on the Swiss Horizon
While this isn’t the first time that a company has used the blockchain to help them access funding, the move could represent a major revolution for Swiss companies.
The recent press release explains that the main difference between the other forms of securities that are currently available on the blockchain is that OverFuture’s articles of incorporation directly state the digital nature of the shares (tokens) and that the shareholders’ registry will be stored using blockchain technology.
In other words, OverFuture’s “tokens” will represent ownership of the company, as opposed to traditional shares.
An IPO, also known as a stock market launch, is a form of public offering where shares of a company are sold to investors. Until now, IPOs within Swiss borders had to be underwritten by one or more financial institutions. But with the country’s recent approval OverFuture’s IPO, companies can now organize their shares digitally and list them publicly on the blockchain, all without the need of any third-party institution.
The Blockchain Difference
In the end, this new use of blockchain technology will allow Swiss companies to maintain more control of their market transactions. And additionally, the use of blockchain technology will also keep the clearing and settlement functions completely decentralized via the use of smart contracts, making transactions safer than ever before.
According to the press release, OverFuture is set to use the Ethereum blockchain for its IPO, and the smart contracts will be provided and handled by the European Digital Assets Exchange, based in Zug, Switzerland.
When it comes to the time and cost of launching an IPO, this move by Swiss authorities represents a huge difference in the way companies can access funding and sell shares to their investors, especially when compared to traditional financial systems where capital markets are dominated by major banks and institutions.
Elsewhere, other regulated exchanges, such as the Swiss Digital Exchange (SDX), are now preparing themselves to usher in this new era of tokenization.