The start-up Amazing Blocks focuses on the still young world of security tokens. While in Germany and most other European countries there are some regulatory obstacles to issuing tokenized securities, Liechtenstein is a bit further ahead. Amazing Blocks CEO Sofia Balogianni told us in an interview about the advantages of the small jurisdiction of Liechtenstein, how long it takes to issue tokenized shares and why digital central bank money also promotes the establishment of security tokens.
How did you come to found Amazing Blocks? What was your motivation?
I had co-organized the Crypto Assets Conference during my studies at Frankfurt School, so I got in touch with a lot of blockchain founders and experts. Particularly inspiring was the presentation by the law firm Nägele, in which the groundbreaking Liechtenstein Token Act was presented. Promising interfaces with current co-founders emerged during the networking that followed. Amazing Blocks‘ product was already outlined there and the first block was laid.
In a nutshell, what is your core business and what benefits do you bring to your customers?
Our core business relates to tokenization and the optional associated investor suite that we will be able to offer early next year. We can help tokenize the business shares of companies under the Liechtenstein Token Act, but also tangible assets such as art objects or even classic cars. Our task is to analyze the customer’s business model and offer appropriate solution concepts for tokens, smart contracts and technical mapping. Our strength is that we can respond individually to customer wishes, as a token type can be flexibly selected, for example equity token, debt token or even ownership token.
What are the biggest advantages compared to the traditional way, without blockchain?
The advantages of our solution already start with the establishment of a corporation. The Liechtenstein Token Act optionally allows for a bankless incorporation without the need to travel to Liechtenstein. We offer our clients a step-by-step plan for an accelerated incorporation of the company and its tokenization. The entire process takes four weeks at best until tokenization.
As for our software solution, we offer a token management platform that allows for the first time to generate everything from equity tokens to debt tokens, depending on the customer’s needs. Fundraising becomes more flexible, efficient and cost-effective with equity tokenization. Moreover, transfers of ownership are possible 24/7 and without a notary. In general, using smart contracts can increasingly eliminate the need for traditional intermediaries. As a LegalTech start-up, we support our clients during the formation process as well as with tech-based issues around tokenization and administration. Here, we then often work with appropriate law firms, for example when our platform needs to be adapted to specific use cases, such as the tokenization of artworks.
Why did you set up shop in Liechtenstein?
Liechtenstein is considered a „blockchain cluster“ and accordingly we can benefit from the already existing blockchain ecosystem here. The government proved its global pioneer status earlier this year when the landmark Liechtenstein Token Act (TVTG) came into force. This allows for the first time the tokenization of company shares and any assets through the disruptive „token container model“, among others. Here, the company can be thought of as a flower vase, which is the legal wrapper and thus enabled by Liechtenstein law. The company can then decide which assets – in this case the flowers – are tokenized by the legal wrapper.
Usually, security tokens are not set up as a share, but as a bond, as it is regulatory difficult to tokenize equity in Germany, for example. Why does it work for you, what do you do differently or is different in Liechtenstein?
That is the German view of things. In Liechtenstein, we tokenized equity. This required a board resolution of about half a page with some regulations. Furthermore, the shares had to be technically mapped as blockchain-based book-entry securities. Then our own shares were tokenized. As real equity tokens.
The regulatory situation in Liechtenstein makes it possible that shares, bonds, participation certificates and generally property can be tokenized. This clearly differentiates Liechtenstein from other countries such as Germany, which are currently still in the development phase. Consequently, we decided to found our start-up in Liechtenstein and to use the already existing, innovative legal basis. With the right law firm as legal advisor, it is also possible to place tokens from Liechtenstein in Germany almost completely without any problems. The tokens generated in Liechtenstein can then also be distributed in Germany, for example, through Liechtenstein’s EU passporting.
To what extent are you involved in the issuing process in the form of a security token offering? Or do you just manage the legal entity?
Amazing Blocks provides the customer with a software solution that, on the one hand, is formally operated by the board of directors or the CEO of a corporation. This means the CEO independently generates the company shares and the subsequent token issuance of additional assets and thus autonomously manages the tokenpad. On the other hand, an optional investor suite can be provided by us to make an investment opportunity faster. For the technology, we work together with Micobo from Frankfurt. We thus support our customers throughout the entire process – investment and administration. However, our customers have full control over their respective private keys.
The market for security token offerings has not yet been able to establish itself on a broad scale. Do you think that will change in the near future?
The reason for the slow growth to date was mainly the lack of legal certainty, which is now provided by the Liechtenstein Token Act – at least for some types and use cases for tokens. It will be interesting to see how Liechtenstein will take on a certain trend-setting function here. Accordingly, we see it as our task to provide educational work here and thus support „mainstream adoption“. The processes in Liechtenstein, which are kept quite lean, are a particular help. Less paperwork means less effort.
What drivers do you see that will help security tokens become more established?
In addition to overcoming legal uncertainty, digital central bank currencies such as the digital euro can help to promote the establishment of security tokens. These will ensure that it becomes more and more natural to transfer various assets such as classic cars or works of art into the blockchain world via security tokens.
What are your next steps? Do you already have customers who have tokenized through you?
The first tokenization through our platform was with our own Amazing Blocks shares, as we only want to offer our customers something we believe in ourselves. That required half a page for a few legal regulations and then a time commitment of 20 minutes. Over the next few months, we will clearly focus on educating the traditional financial world in the area of tokenization and attracting them as customers. Here we have initial leads in areas such as equity, vintage, solar, and machine tokenization. We are also working on expanding our software to offer a holistic platform that acts as a „marketplace.“