Topic: Crypto Bonds/Stocks (Read 153 times)

Cryptobonds issuers are subject to detailed scrutiny. Due diligence is carried out as in fiat bond issuance process. Also, we may act as trustees for the bond, that is, we guarantee repayment in the case of default. For that purpose we set aside the full amount of the issue; it is on blockchain so visible to anyone. We charge premium to the issuer for taking that risk.

There is no rating agency in place as of yet, so the underwriting syndicate will carefully examine the issuer. This is similar to ICO pre sales. Imagine you are a member of the syndicate, asked to commit yourself to purchase a large block of bonds. You want to be sure they are redeemable or resaleable so you will ask the issuer important questions. Bondholders will be able to hedge their positions by purchasing cryptoswaps, i.e. insurance on default of the bonds.

The FCA's position on crypto derivatives is at https://www.fca.org.uk/news/statements/cryptocurrency-derivatives and bonds particularly are mentioned in https://www.fca.org.uk/publication/feedback/fs17-04.pdf .

We will follow the issuance process as specified by the https://www.fca.org.uk/markets/ukla wherever applicable. Examples of a substantial fiat bond documentation are available at https://marketsecurities.fca.org.uk/ and for an informative overview of UK bonds, an excellent resource is https://www.wildy.com/isbn/9781912363100/clp-legal-practice-guides-banking-and-capital-markets-2018-paperback-a4-college-of-law-publishing .

I propose to issue bonds on https://counterparty.io/ like e.g. https://xchain.io/address/1Pg37Kbjfs7uw4ifZtU7rbHNPWFjMhYowk or other platform if more suitable.

Bond terms will need to be decided:
- how to supplement for a credit rating (no rating agency in place as of yet)
- the amount
- return on investment
- when redeemable
- bondholders' rights in the case of default
We are happy to help issuers with the specification of their requirements. As to our remuneration, it will be in principle based on a combination of fees and commissions and I propose to finalise it together with the issuers.

Issuing cryptobonds is a new way of raising funds for your project. In an ICO, token buyers believe in the future rise of your token's value. That is all they get. Many token buyers have been disappointed by failures of most ICOs and now they prefer the advantages of fixed income from cryptobonds.

By issuing a cryptobond you promise to repay bondholders the funds they paid you for the bonds at some point in the future. The cryptobond is denominated in a major cryptocurrency or in your token so if your token's value rises then the bondholders benefit from the appreciation as well as from interest that you pay for the bond.

Saw this on the subforum text and was curious.

How is a crypto bond/stock different/better or worse than an ICO token? Would you buy a crypto bond? Would you want repayent in BTC (or at leats denoinaed in BTC/Your Favorited crypto) Have you brought or sold one? If so why/why not?

What about SAFT/SAFEs and convertible bonds?