Quote from: Rigorous on December 28, 2018, 11:53:04 PM

Quote from: DuskNetwork on December 28, 2018, 11:43:23 AM

Quote from: berrehili on December 26, 2018, 10:24:40 PM

Everyone talks about STOs but no one exactly knows how it will interact with the legacy jurisdictions... What do you code in a security token? Equity? Voting rights? Votes? Dividends?
If it's Dividends and equity isn't this a convertible note? Debt?

I think we still have to wait for regulation to follow through this before you make any hasty decision around STOs.

If STO done right it doesn't interfere with the legacy legal rules as per that jurisdiction. Just need to know what type of STO is compatible within which jurisdiction.

E.g. in the Netherlands STO'ing equity would require a notary deed (from a notary) every time equity changes hands. This wouldn't make it the greatest fit.
Now if we use a construction such as the dutch STAK, we are able to trade economic rights derived from the equity without requiring a notary. Thus making it viable to STO economic rights (which in many respects are similar to equity) in the Netherlands. Its a matter of knowing what can be done, and how it should be done.

Do such constructions exist in most other countries too or is the legal situation of the Netherlands one of the exceptions?

And is this a form of legal arbitrage in which the situation could change as soon as the regulators or government notice such constructions are circumventing the intention of the law?

The construct exists in other jurisdictions but is often impeded by how freely they are transferable. For example the UK has a similar foundation governance structure, however the transfer of these share certificates is hampered by requiring a transfer deed / stamp duty. The latter is an issue because the big benefit is the increased liquidity and transferability of tokenized securities vs traditional securities. The Netherlands is something of an exception because of the lack of these impediments, however there are other jurisdictions, and many contractual mirror images being created in jurisdictions that do not have these features. The legal construct has been around for decades and is extremely typical, we foresee little legislative risk here.