Regular visitors to this News section will be aware that we believe 2021 is set to be the year the token. On the back of the resurgent strength of cryptocurrencies, digital money has been gaining acceptance from the mainstream.
Swiss digital asset bank Seba is set to issue its Series B equity to shareholders as security tokens on a blockchain.
The move comes after Switzerland adopted a new distributed ledger technology law that recognises tokenised securities as an asset class that can have their legal ownership rights transferred via a blockchain.
Finma-licenced Seba Bank had already indicated that it would tokenise its shares of the Series B fundraising when the law came into force. The equity tokens are fully secured by the DLT Law, and shall be issued and held within Seba’s banking-grade digital custody in a Finma-regulated environment.
The tokens are based on ERC20 Ethereum protocol and are “engineered to allow seamless connectivity for trading and liquidity on future internationally recognised digital liquidity venues,” says the bank.
Hans Kuhn, board member, Seba, says: “With the DLT law coming into force today, Switzerland reaffirms itself as one of the most progressive and innovative legal and regulatory jurisdictions around the world that now fully supports the issuance of digital securities on a native blockchain basis.
Historical Performance And IFISA Process Guide
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.