In recent times, financial regulatory bodies worldwide have observed a substantial market increase in Initial Coin Offerings (ICOs) or Token Sales. Although a number of them are close to completely blocking this new form of fundraising (i.e. the FSC and the PBoC) many appreciate its innovative potential and would like to accompany it with fair and comprehensive regulation.
As such, regulatory bodies like FINMA (Swiss Financial Market Supervisory Authority) and ESMA (European Securities and Markets Authority) have emitted numerous warnings on compliance, while exhaustive guidelines are still being devised and rolled out. The regulatory concern is especially directed at companies emitting utility tokens, as the majority of them are purchased with the intent of producing financial gains, thus concealing a security asset class.
In addition, the operationalization of token emission is often rather obscure: some startups have raised funds without a platform or issuing house to act as an intermediary and others have taken lightly the standard KYC (Know Your Customer) and AML (Anti Money Laundering) processes required.
As the industry develops, this Wild West will eventually come to an end benefitting investors and optimizing the market. Tend aims to be at the forefront of this transformation by shaping the world’s most compliant token sale despite its unregulated environment.
First of all, Tend aims to emit a tokenized security token, thus thwarting the compliance dispute on tokens that are declared a utility but are actually exchanged as a security. As regulation kicks in, a high percentage of ventures will likely have to shift to this token structure, as it most closely mirrors how tokens are actually being conceived.
It follows that TND tokens are issued as Partizipationsschein according to art. 656a seqq. of the Swiss Code of Obligations. This means that investors will be provided with participation certificates that entitle token holders to an annual dividend, as customary in Swiss corporate law. However, these certificates do not grant voting rights. Further, each year, an independent auditor will control spending of proceeds and devise a summary report that will be made available to all token holders.
As a first step to participate in the token sale, investors will have to undergo a thorough but swift KYC and AML process as devised by our licensed partners. The former is directed at verifying individual identity through basic personal information, an ID upload and an additional question concerning Politically Exposed People (PEP) or Relative or Close Associates (RCA). The latter is instead directed at identifying the provenance of the invested money. In this line, there is a question asking for the individual’s range of income and the source of such funds (i.e. regular salary).
In some cases, depending on the amounts involved, Tend may require investors to provide further information — this will happen shortly after the Token Sale has been closed and upon token allocation.
Lastly, the FIAT funds invested in the Token Sale timeframe will be deposited at an custodian bank located in Lichtenstein. There, they will be safeguarded until the KYC documents have been scrutinized and approved by the related authorities.
Along with our legal partners, we have strived to make this Token Sale the most compliant yet. Not only to reassure our investors of the utmost quality and professional experience we bring to the table, but also to set the standard for the next generation of Token Sales.
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https://medium.com/tendswiss/tend-the-worlds-most-ambitious-token-sale-to-shape-a-new-level-of-compliance-in-an-unregulated-39990c278af7