Advisory for Product Structuring

Through our forward-thinking approach toward product structuring and issuance, we aim to guide businesses and corporate clients through their own Security Token Offering (STO) as an alternative to traditional Initial Public Offerings (IPOs).

Benefits of Security Token Offering (STOs) over traditional Initial Public Offering (IPOs)

1) Global Accessibility:

  • STOs breakthrough geographical barriers. Investors who have access to an internet connection worldwide can participate.

  • Companies can tap into a diverse pool of capital without being limited to specific stock exchanges or geographical locations.

2) Efficient Processing Time Over Traditional Financial Products:

  • Security token offerings streamline the issuance process.

  • Digital tokens can be created and distributed at a much faster speed than traditional financial instruments.

3) Investor Transparency:

  • Immutable Record-Keeping: All transactions involving security tokens are recorded on a blockchain, a tamper-proof and transparent public ledger. This provides investors with a clear and real-time auditable record of ownership and transaction history, pioneering a new standard for product transparency.

  • Programmable Compliance: Smart contracts can be embedded with regulatory requirements, automatic audits and automated compliance checks by streamlining the process for both issuers and investors. This provides a clear and verifiable record of adherence to regulations.

4) Tax Optimized Distributions:

  • Through strategic international entity structuring, companies can issue dividends to their international investors in a tax-optimized manner and be able to offer exemption solutions for international foreign unaccredited investors

5) Improved Liquidity:

  • The XRP Ledger (XRPL) Automated Market Maker (AMM) acts as a facilitator for efficient security token trading. By utilizing liquidity pools, it automatically matches buy and sell orders, even when there's no active counterparty. This constant order matching helps maintain deep liquidity for security tokens, reducing the gap between buying and selling prices (spreads). This not only benefits investors by offering tighter spreads but also encourages participation in the security token market by ensuring a smoother and more efficient trading experience

  • Global investor Access: Security tokens can be traded 24/7 on secondary markets accessible from anywhere in the world. This eliminates geographical restrictions present in traditional stock exchanges, increasing the potential investor pool and optimizing liquidity.

  • Faster Settlement Times: Traditional stock trades can take days to settle, while STOs leverage blockchain technology to facilitate near-instantaneous settlement, allowing investors to access their funds quickly.

  • Reduced Friction: Trading security tokens involves fewer intermediaries compared to traditional stocks, leading to lower fees and a more streamlined trading experience leading investors to gravitate towards these types of products.

Investor Benefits:

  • Greater access to investment opportunities due to fractional ownership and global accessibility.

  • Increased confidence in investment decisions due to enhanced transparency and immutable record-keeping.

  • Faster and more efficient trading experience with near-instantaneous settlement and potentially lower fees.

The Process

Step 1: Collaborative Product Structuring

Work together with the corporate client to define the product structure for the security token. This involves:

  • Evaluating the product's purpose: Understanding the underlying asset or value proposition being offered (e.g., company shares, real estate ownership, etc.).

  • Identifying target investors: Determining who the client wants to invest (accredited investors, retail investors, specific industry groups).

  • Aligning client expectations: Discussing the client's goals (capital raising, increased liquidity, new investment vehicle) and investor rights/benefits (voting rights, profit sharing).

  • Navigating regulatory landscape: Ensuring the offering complies with relevant regulations based on the client's location and target investors.

Step 2: International Corporate Structuring Advice

Provide advisory services to the clients on how to best structure the tokenized product from an international corporate perspective.

This may involve:

  • Optimizing legal and tax considerations for the offering.

  • Establishing appropriate entities for the STO structure.

  • Addressing and navigating through international regulatory frameworks.

Step 3: Client-Led Public/Private Offering Marketing

  • The client takes the lead in marketing their public/private offering. This allows them to tailor the marketing strategy to their specific target audience and investment goals.

  • GMP may offer supportive resources and guidance on marketing best practices within the realm of security token offering.

Step 4: Launch the offering to be trading on GMPs' platform.

  • Once the offering is complete, the client's offering will launched and become available for trading on Gen. M Partners' platform.

  • Gen. M Partners acts as the trading platform, facilitating the buying and selling of the security tokens.

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