One more step towards the future of finance

The European Commission is moving forward with the regulation of digital assets during the cryptowinter, where there is nervousness among investors who have entered digital assets with interest rates that have remained at record lows until recently. To promote access to non-bank finance for small businesses in recent weeks. On the one hand, the Decentralized Technology Registry (DLT) Has approved the regulations MiCA (Crypto-Asset Markets) aimed at addressing the western side of digital assets. This will allow the Tokenization of traditional financial products and the development of Security Tokens in blockchain networks. The technology pointed out last week by the president of the CNMV, Rodrigo Buenaventura, is “probably the most exciting innovation in financial markets in the last 40 years”.

What does it consist of?

The pilot system “opens up the current volume of global financial products of $350,000, making it possible to compensate and create markets using only these tokenized products“, said Enrique Palacios, Director of CNMV.

For Palacios, this is a regulation “more important than MiCA for the financial services industry”, but it has been overlooked. Gloria Hernández Aller, partner of FinReg 360º, has established regulations that “all stakeholders will open up new opportunities to raise funds more easily without mediation through capital markets”.

This regulation creates a European sandbox (test bench) to bring DLT technology to the market. This allows you to benefit from current regulatory exceptions. Just as it happens in the Reental real estate tokenization, negotiations and liquidations are carried out simultaneously, without the need for an intermediary (end users are members of the market) or without a central guardian, has already attracted the attention of several Spanish projects.

“This rule allows the granting of personalized licenses, so it applies to the management of the secondary market of stocks, bonds or units of funds represented by Distributed Ledger Technology (DLT), even if it is not a regulated entity,” says Gloria Hernández Aller, partner at FinReg 360º.

When is this initiative going to take place?

The pilot system, which will take effect in March 2023, is valid for three years, extendable for another three years, excluding the five initially set.

For Álvaro López, chief capitalist of Uría Menéndez's securities deposit field of action, “the decision of the European legislator to apply a pilot regime for the creation of market infrastructures that apply this type of technology (TRD), compared to other legislative alternatives, is correct; this will allow market participants to test this technology on a reasonable scale, applying the exemption regime, and could ultimately represent an additional and promising form of raising capital for companies”.

The code contemplates the origin of three types of figures: multilateral concert systems —to which agencies and securities firms can register—, rebate systems, and concert and rebate systems —to which traditional market operators may be referred for the second time.

The European Commission opens the fence in this way to Tokenize company shares whose capitalization is less than 500 million euros; project bonds, for even 1 billion euros, and shares in resources that have a deposit value of less than 500 million. In addition, it is established that any Security Token it cannot have a market value greater than 6 billion at the time of issue, or 9 billion if appreciated. Limits to protect market integrity and financial stability.

Conclusion

This news represents a major step forward in the regulation of Tokenization of assets and its acceptability by law. In Reental we have been able to see the great support that this new technology has, and the great acceptability on the part of users. At Reental, we want to continue offering the best investment products and to be leaders, not in Europe, but in the world, in tokenization of real estate.

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Welcome to the new way of doing finance, welcome to Reental.