TOKO, the digital asset creation engine empowering value creation, and Hex Trust, Asia’s leading digital asset custodian, have successfully completed one of Asia’s first tokenisations of private debt on the Hedera enterprise-grade public ledger. The debt was issued by Calcite Limited, a Hong Kong private company with American and European shareholders, and legal advice was provided by DLA Piper.
TOKO issued the digital private debt on Hedera Hashgraph, the most widely used enterprise-grade public ledger, with Hex Trust, Asia’s leading digital asset custodian. Calcite Limited engaged TOKO and DLA Piper to carry out a tokenised fixed income asset issuance to finance the acquisition and development of a calcium carbonate quarry in Europe. Hex Trust acted as the custodian for the investors’ tokens.
The combination of the TOKO platform, DLA Piper’s legal experience in structuring financial instruments, Hex Trust’s fully integrated custody solution and the efficiencies of the Hedera public ledger has brought together the best of four worlds to make tokenised fixed income issuance and asset management cheaper, faster and easier.
This tokenisation is intended to cover the full value chain of a fixed income token, from issuance and distribution to token over-the-counter (OTC) transfers, and ongoing asset servicing concepts such as custody and coupon distribution, until debt maturity and token redemption. TOKO structured the tokens as fixed income instruments, while DLA Piper assisted with the legal documentation embedded in the smart contract. The tokens have a unique International Token Identification Number code (ITIN), in compliance with the International Token Standardization Association standard (ITSA), for increased operational transparency and safety.
Unlike traditional fixed income instruments, tokenised fixed income tokens are designed to be more efficient and less costly, with a faster fundraising process and access to new types of investor pools. The benefits are significant:
- For token issuance, TOKO minted and transferred digital assets directly into Calcite Limited’s and its investors’ Hex Trust accounts, complying with know-your-customer and anti-money laundering controls. The reduction of intermediaries allowed major cost savings and facilitated better transparency and faster transferability.
- For token asset management and servicing, several manual processes have been eliminated, and corporate actions such as coupon payments can now be carried out with self-executing instructions on the Hedera ledger.
- Leveraging OTC token transfers amongst investors via Hex Trust’s platform demonstrated secondary market liquidity. It highlighted the benefits of fractionalisation in democratising investment opportunities.
This tokenisation also sets a new standard on the technology front. The tokens represent the first private debt tokenisation created and issued using the Hedera Consensus Service (HCS) and Hedera Token Service (HTS), in the form of HTS fungible tokens.
Scott Thiel, Partner at DLA Piper and lead lawyer for TOKO said: “I am thrilled to have led one of the very first debt tokenisation transactions in Asia. This is not only a significant milestone and proof of concept for TOKO, it also signals a tremendously exciting development for the future of capital markets.”
“This first of its kind tokenisation of private debt on Hedera demonstrates the future of finance,” commented Mance Harmon, CEO and co-founder, Hedera Hashgraph. “From day one, our vision has always been to create shared, digital worlds. These can only be brought to reality by leveraging the computational trust and speed that Hedera provides. We commend TOKO and Hex Trust on their pioneering work creating a robust, digital solution to an age-old problem of asset issuance and management.”
Alessio Quaglini, CEO and co-founder of Hex Trust added: “The collaboration combines the domain expertise of major players to create a unique offering that further integrates the digital asset ecosystem with traditional finance. Tokenising private debt is a major step forward for the industry, facilitating access to a broader range of investors seeking attractive fixed-income products.”
Eric Smithers, Esq. a member of Calcite Limited, said “We recognized that tokenisation of our initial capital raise would lay the groundwork for all our future capital requirements. We chose TOKO, DLA Piper, Hex Trust and Hedera because they are at the forefront of blockchain based capital markets. It has been a rewarding experience with this incredible team and we look forward to implementing our vision for using blockchain in all our capital needs and product offerings.”