Independent Evaluation Framework for Security Tokens

After a recent boom of Initial Coin Offerings [ICOs] the market is now moving towards the tokenisation of "real" assets (e.g. shares, bonds, real estate). These so called security tokens [STs] provide a new form of financing; also for established companies such as small and medium-sized enterprises [SME]. STs allow to digitally exchange and trade securities in an efficient way without having to involve an intermediary. However this form of financing is still new, uses complex technology, is exposed to a broad range of regulations and has also already attracted fraudulent activities. These factors led to scepticism among investors, banks and other stakeholders. Thus, a new quality guarantee is needed to certify "solid" cases.

The project at hand will not only provide assurances to investors but also essential information to other stakeholders (e.g. banks). To do that, an independent evaluation framework will be developed. This framework defines a thorough categorization of investment types, assessment criteria and standardizes measuring methods. In the second part of the project a level based accreditation process will be defined and put in practice via an online platform. Both the framework and the accreditation process represent a novelty in the market of STs. Especially the focus on SME and the early incorporation of the needs of institutional investors (e.g. pension funds) is unique. Moreover, it will be the only accreditation provided by a Swiss FINMA-approved rating agency (Fedafin, the main implementation partner).

The Project is an example of interdisciplinary collaboration as it includes partners from the academia, banking, finance, legal, IT and the rating industry. However this is not just a nice add-on; it is an essential requirement for the success of the Project. Lastly, it is key to scale the project's solution quickly. Thus, the the accreditation will be governed by a new association, which will be open for additional members (e.g. law irms).