Estonia LLCs Can Be Tokenized
Estonia continues to be a leader in blockchain adoption. The country is seeking to expand its role globally by offering "e-Citizenship". This grows the population that are tied to the tiny EU nation. More importantly, this opens the door for companies to be set up in the tiny country, even if they are virtual.
Continuing the process, the Parliament approved the removal of a law that applied to shared ownership. Now, it can be done via any means that can be done in writing.
While tokenization was not specifically mentioned, many legal experts are already opining that this is going to open the door for any LLC to get involved with tokenization. This will create opportunities to generate new capital for funding through security tokens.
The benefits of blockchain are known to most who are involved in cryptocurrency. This is new territory for the traditional business community. The immutability of blockchain makes the transferring of ownership secure and unchanging. At the same time, the costs associated with this type of activity is reduced. Raising money is an expensive process for companies since they have to go through the banking system.
One of the points that I keep harping upon is the fact that people who are involved in cryptocurrency keeps growing their bags each day. The move by Estonia will open these companies to new investors. Blockchain is global in nature meaning that a company can get money from anywhere in the world, anytime of the day.
As the wealth of individuals who are presently holding cryptocurrency increases, those same people will be looking for more places to put their money to work. Imagine being able to buy into a plumbing or electrical company that is "located" in Estonia. Owners can raise capital in a more efficient manner while investors can generate a significant return if the company is profitable.
The nice part of the legislation is that it allows companies to go onto decentralized permissionless exchanges. For example, a company can use ERC-20 tokens to tokenize their operations, meaning that they tokens can be traded on any exchange that accepts that token format.
One aspect to this is the idea of tokenizing real estate. Since becoming popular a few decades back, LLCs are now the the default way to structure real estate deals. Many wrote how security tokens pertaining to real estate can be an enormous market. This is a way to access that by selling tokens in LLCs that hold real estate.
Entire deals can be structured to provide the resources for the real estate deal. Tokens can be sold against the real estate acquired with equity going to the token holders. Of course, if it is a revenue producing property, one could also sell another set of tokens that enable holders to share in the net income on the property.
In other words, we can see how things can really expand in scope.
Eventually, I think we will see most everything tokenized, It is a much simpler process as compared to what we deal with now. There are billions of dollars extracted from deals to achieve the same end that tokenization can achieve. It also reduces on the bureaucracy that is associated with the present system.
Estonia is leading the way. I would not be surprised to see a huge number of LLCs popping up in that country to enable direct funding. This could then be tossed on the decentralized exchanges which carry Ethereum tokens.
The possibilities are just starting to pop up.
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