A new fintech is working on the creation of a crypto asset class based on the continuous token offering (CTO). Unlike the popular initial coin offering (ICO), the CTO funding model as proposed by the Hong Kong-based Two Prime entails making the token a proper investment class in which real world investors would be interested in.
With initial coin offering, most of the tokens are sold at the early stage when the coin was created but with the proposed digital asset, the company plans to release 5 million tokens which are just 5 percent of the total 100 million proposed.
This is very similar to the model adopted by Ripple in XRP. The rest of the tokens will be released over the span of 10 years. It is instructive however that the Ripple token has been subject to litigations with many investors involved in a class action lawsuit against the company over its cryptocurrency. In one of the suites, the litigants termed the XRP crowdsale a never-ending one.
February Launch Date
Two Prime plans to launch the first of its tokens, FF1 on the Japanese exchange Liquid by late February with each taken valued at $3. The company’s chief operating officer (COO), Alexander Blum, said that one of the impressive aspects of digital currencies is the ease with which startups raise funds through the initial coin offerings and highlighted that the firms intention is bring to fore its equities feature to the attention of regular investors in the capital markets.
According to Blum,
“As VCs generally shun the seed stage, [ICOs] filled a niche that traditional financial players left unaddressed,”
He stated that the purchasing option of the Two Prime token combines attractive features
“combines the features of a close-ended fund, asset-backed token, and a secure store of value”
To show his belief in the concept, the company’s CEO Marc Fleury has already invested $2 million of his own personal asset in the project. Fleury is the creator of JBoss, an open source Java application server. The firm was sold to Red Hat which is currently owned by IBM.
It is clear that the regulatory question is still the albatross of similar projects as seen with the Ripple lawsuits. The firm would have to navigate it without falling foul of agencies such as SEC especially when such tokens were not registered as securities with the regulator.
Two Prime assured its investors that it is already working with lawyers in several jurisdictions to reduce the possibility of a clash with relevant laws.