The Legal Guide to Real Estate on Blockchain: The Listing
This series outlines the legal aspects of tokenizing real estate on a blockchain, and is created by Volodymyr Havrylyuk-Yensen, Legal Counsel at DigiShares | Digital Securities & STO, and Emil Holtemann, Marketing Manager at RealEstate.Exchange.
Disclaimer: This material is intended for general information purposes only and does not constitute legal advice.
A short definition of primary and secondary investment offering:
In a primary investment offering, investors are purchasing shares (stocks) directly from the issuer. However, in a secondary investment offering, investors are purchasing shares (stocks) from sources other than the issuer (employees, former employees, or investors).
Listing on an Exchange for Primary or Secondary Offering
Pending on your tokenised asset, you might benefit from listing on an exchange such as RealEstate.Exchange (RE.X). In order for listing tokenised securities an issuer would need to complete the following steps:
- Structuring and securitisation of real estate assets in an Special Purpose Vehicle SPV (Details in this article)
- Tokenisation of equity or bonds issued by the SPV
- Go through a KYB verification and technical onboarding process
- Comply with financial promotion legislation depending on the type and scope of the offer
The last point warrants additional attention, if an offering is directed towards retail investors it would generally require a prospectus approved by a relevant financial authority of an EU member state. However, for certain issuers and types of offerings, a full prospectus would be inappropriate because of the time, cost and complexity involved in the approval process. An alternative is to relay on one of the following exceptions:
- The total size of the offer in the Union is below EUR 8 million (applicable in Germany and includes retail investors)
- Offer is directed solely to qualified investors
- Minimum investment/ticket size is EUR 100,000
In case of the offer under EUR 8 million on RE.X, the issuer would need to comply with the requirements set out by the German Federal Financial Supervisory Authority (BaFin). In particular, such issue would need to prepare a short 3 page Securities Information Sheet (WIB) and file it with BaFin, more information can be found here.
Speaking of BaFin, RealEstate.Exchange already received a statement, you can read it by clicking here.
Learn More About Tokenization of Real Estate:
You can learn everything about RealEstate.Exchange through LinkTree — here you can also subscribe to the newsletter.
If you feel ready to talk about the steps of asset tokenization, reach out to me personally on LinkedIn: Emil Holtemann.
I will guide you through the steps, and set you up with the right people for your tokenization journey.
