our platform and technology
A New Approach:
Uniquely Powerful Smart Securities
We’re confident that smart securities (security tokens) represent a future pillar of the financial sector; fractionalizing ownership and enabling investment features in ways that are difficult or impossible to achieve in conventional asset classes.
A smart security can include aspects that are equity-like in terms of capital appreciation, debt-like in terms of asset encumbrances, enable cashflow participation similar to royalty-based financing and include utility features comparable to a loyalty program.
But we’ve done an in-depth analysis and found that there are still a number of blockers preventing this new asset class from fulfilling its potential.
Regulatory issues are perhaps the most well-known – there’s both been hesitancy to blockchain based securities on the part of regulators globally and a broad disregard of existing securities regulations by early blockchain adopters and their ICOs. Any serious approach to smart securities needs to address these factors at the outset.
Technology has also been an obstacle, making the creation of blockchain-based tokens a specialized affair limited to those with specific competencies. Solutions and service providers are needed to bring down the costs and increase the accessibility of smart securities to non-specialized issuers.
While the market is beginning to offer solutions to regulatory and technology challenges, the most significant hurtle we found related to investor rights protections. The sentiment that sophisticated investors repeatedly expressed was “I know what to do with traditional equity or debt, I know how to call on my investor rights - why should I take a risk on a new type of instrument? What body of law exists that defines how a smart security is treated in times of difficulty?”
To achieve our mission of enabling a decentralized economy, we’ve built a platform that addresses each of these critical obstacles to market acceptance.
Regulatory Compliance & scalability
Each of our smart securities offerings is based on full EU regulatory compliance and the Hunit Foundation operates as an EU licenced broker-dealer (*licencing in process). Depending on the needs of the Foundation’s client (the issuer), the resulting smart securities may be offered under an approved financial prospectus (granting EU retail investor access and general marketing activities) or may use one of the existing exemptions that allow for unregistered securities offerings with restrictions on investor types, numbers and/or total funding.
Enhancing the speed and functionality of our platform and the smart securities its used to create, we’ve chosen to base it (and the issued smart securities) on the Stellar blockchain. Why Stellar? It’s optimized for financial transactions, features a higher transaction clearing rate, avoids use of environmentally wasteful and unsustainable mining activity, features a native decentralized peer-to-peer exchange and is already integrated with by many actors in the global banking system.
autonomous investor rights enforcement
But we feel that our most important and powerful innovation is our patent-pending solution to smart-securities’ primary hurdle to widespread acceptance – enforcement of investor rights. We understood that we had little ability to hasten the adoption of legal code that would solve the uncertainty around smart securities investor rights so instead we looked at how we could bring the real world onto the blockchain.
Through the use of our patent-pending, decentralized system, our platform allows smart securities issuers to make business model specific commitments to investors, pre-plan and pre-authorize remedies in the case of non-compliance and for the collective body of investors to verify that the commitments are being met.
We believe our system doesn’t just match the types of enforcement options available in traditional asset classes, but represents a dramatic improvement over them. Faster, cheaper, predictable enforcement of investor rights that are business-model specific - without having to rely upon the legal system. It allows a smart security to do what previously required the combination of centralized exchanges and national legal systems.
“Blockchain-based smart contracts in control of real world investments, without relying upon the judicial system.”