With the ICO arena going through a state of stagnation, it appears that a new and emerging form of cryptocurrency is beginning to gain traction – security tokens. Whether its real estate, commodities like Gold and Diamonds, or fine-art, security tokens offer investors consumer rights far and beyond a simple utility token.
However, as much of the security tokens space is still in its infancy, most projects rely on a governance system that is based on its underlying smart contract framework. As such, security tokens are not regulated per-say, insofar that they are not bound by existing regulations as per the jurisdiction they operate in.
In order to take things to the next level, the likes of Blueshare – a construction entity involved in the exploration of natural resources mining, aims to alleviate these regulatory uncertainties through a security token of its own. The key metrics that makes Blueshare stand out is that their Blueshare Security Tokens are authorized and regulated by Swiss financial authority FINMA.
In a nutshell, Blueshare is in its early stages of offering regulated security tokens against its natural resources mining operations. Its parent company – Interprom, has been fully operational for more than 23 years, subsequently illustrating that the project has the backing of an established industry stakeholder.
Previously focused exclusively on its construction services, the company recently diversified in to the mining sector, obtaining multiple exploration rights along the way.
In terms of Blueshare themselves, the idea behind the launch of its regulated security token is to allow whitelisted investors to invest in traditional equity capital participation shares – issued by INTERPROM Mining AG.
Facilitated by the Ethereum blockchain, those in possession of Blueshare Security Tokens will be accustomed to the very same equity perks as one would expect in the traditional financial arena. This includes the right to dividends, capital appreciation, liquidity, and mobility.
However, and perhaps, most importantly, token holders have a stringent oversight by Swiss regulators FINMA. This ensures that the project complies with existing security laws, much in the same way as a conventional security would.
This presents the security token arena with a complete sea-change in how governance is framed. For example, and as noted earlier, conventional security tokens are usually backed by assets, with the underlying governance system reliant on predefined smart contracts.
While the Blueshare platform also utilizes the many benefits of smart contract technology, the key different is that existing laws surrounding securities in Switzerland supersedes the terms set out in the smart contract.
Benefits for Security Token Holders
In terms of how investors are likely to see gains – both in the form of capital appreciation and dividends, this will have a direct correlation to the underlying success of the business. More specifically, and as is industry standard in the mining exploration space, INTERPROM Mining AG make their money via concessions when natural resources are found within its exploration spots.
The company claims that these very sites are currently accustomed to $4.3 in reserves, with 50% of this consisting of unmined Gold. With respect to Blueshare Security Tokens, it is assumed that value is determined by the success of its exploration endeavours.
Although it is hoped that appreciation gains will present themselves in the near future, Blueshare note that their key focus is on its dividend payouts. Essentially, the more successful the project’s mining operations are, and thus, the higher its revenues and net profits, the more dividend yields the firm will be able to distribute.
The exact yields on offer are yet to be established by the team, however, it is assumed that this will become clearer as its mining operations progresses.
Experienced Team and Partnerships With Notable Third Party Auditors
The team behind Blueshare consists of experts from a range of fields linked to IT, engineering and geology, as well as professionals from the world of marketing, business, and of course, construction and mining.
The Blueshare platform will also be accustomed to a range of audits performed by notable third party organizations. For example, Geneva-based Altcoinomy have partnered with the project to provide AML/KYC services, and Hosho will audit the projects’ smart contracts.
Financial and valuation due diligence on parent company Interprom will be initiated by RSM, while NW Landfill and Quarries rights will be audited by CMS. As such, not only are token holders accustomed to a stringent regulatory oversight, but concerns regarding audit and verification have also been considered.
Parent company Interprom Mining AG is looking to utilize a Hybrid approach to its security token structure. By issuing 150 million and 300 million class A and class B shares, respectively, this will subsequently provide an investment framework for both crypto investors and traditional investors.
The class-B shares are represented in the form of a security token, with one Blueshare Security Token linked to 1 class-B share. As noted earlier, the underlying technology is being facilitated by the Ethereum blockchain.
While class-B shareholders will be accustomed to a share of dividends as and when they are issued, class-A holders will earn dividend rights from 2024 onwards. On the other hand, while class-A holders will have voting rights, class-B holders will not.
In order to open the doors to external investment, Blueshare will be utilizing a security token offering (STO).
Available to both individuals and entities, the STO has set a hard cap limit equivalent to 128 million EUR, which would resemble 80 million Blueshare Security Tokens. In order to ensure that the project complies with the strict regulatory requirements of Swiss-based FINMA, all investors will need to engage in an AML (Anti-Money Laundering) and KYC (Know-Your-Customer) program.
Those behind the STO have noted that they aim to have the Blueshare Security Token listed on at least three exchanges by the close of 2019, with this figure increasing to six by the end of 2020.
In summary, the team at Blueshare are clearly looking to take consumer protections in the security token space to the next level. While those operating in the security token arena typically rely solely on the governance of its predefined smart contract, Blueshare Security Tokens comply fully with existing securities laws in Switzerland. This ensures that token holders are accustomed to a stringent regulatory oversight at all times.
In terms of the project itself, the concept of backing mining operations in the natural resources industry is an interesting one. On the one hand, success with respect to its mining concessions will no doubt yield handsome profits for the company, which should, at least in theory, drip-feed back those in possession of its Blueshare Security Tokens. However, on the other hand, there is no guarantee that its respective mining operations will yield long-term success. Mining is traditionally a risky industry for investors, regardless of the underlying natural resource.
The key standout point is that the project’s parent company – Interprom, have been operational in the construction and mining space for well over two decades. Such a long-standing reputation goes a long way in the world of blockchain assets, especially when one considers that the organization operates in the regulation-heavy arena of Switzerland.