Swarm, the next gen blockchain platform for issuing security tokens, has opened up pre-funding of the Robinhood Equity Token or REHT. As of today, accredited investors may register to invest to hold equity in Robinhood.
Labeled the “first security token of its kind,” when the hurdle amount is achieved, Swarm will form an entity to acquire equity via relationships with shareholders and convert the funds into Robinhood equity tokens. According to the offer page, there is a soft cap of $300,000 and hard cap of $1 million.
Philipp Pieper, CEO of Swarm Fund, says that secondary transactions in private equity is not new in the US. What is new is the digitization or tokenization of these assets;
“One of the key innovations of tokenization is that token owners can participate in the value creation of the very network they are part of. Swarm is bringing this paradigm shift to companies that are key players within this movement, but have yet to permit the network to participate.”
Swarm morphs the securities into digital assets by using blockchain. Each tokenized asset is said to be represented by a unique security token. Swarm creates a special purpose vehicle to hold these tokenized assets which represent fractional ownership of the entity.
The SWM token itself is used for gas, governance, and incentives on Swarm, similar to how ETH serves as gas for applications running on Ethereum.
Swarm says the Robinhood Equity Token (RHET) is the first of many tokens representing equity in private companies expected to launch on the platform.
While only accreds can easily accomplish this today there is a push in Congress to update the accredited investor rules which should help enlarge the pool of investors by creating a sophistication qualification.
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