Innovative technologies such as tokenization and blockchain hold huge potential. They offer new investment opportunities to everyone – large and small investors – and they present a cost-effective alternative for companies to raise capital. The question is how to get there? – This case study outlines the process and showcases it focusing on the Finka token.
Few people would think it possible to own part of a cattle ranch. And yet, thanks to tokenization, this is possible even to smaller investors all around the globe. Let us start this journey by traveling (virtually, of course) to La Pradera – a sustainable, organic, eco-friendly and ESG-compliant certified cattle ranch based in the sunny, beautifully scenic Bolivian countryside near Santa Cruz, where the grass grows naturally over rolling hills stretching out over 3200 hectares.
INTRO – WHAT'S A FINKA TOKEN?
The La Pradera cattle ranch is the home of 4300 cattle. While many may not realize it, cattle ranching provides an excellent, steady source of revenue. This makes it interesting to consider as a potential investment and, more specifically, a means of diversification in an investment portfolio. But as already mentioned, investment in cattle ranching usually is not possible for the majority of small to medium investors. Tokenization can change that.
The Finka Security Token represents the convergence of an agricultural product and crypto finance strategy. The Finka token is an ERC20 compatible token. It’s a smart contract that runs on the Ethereum blockchain.
Launched in December 2019, the Finka Token offers retail investors the opportunity to access and trade a security backed by the operations of the La Pradera cattle ranch. More precisely, the Finka Token is a claim to a share of the net operating revenue of the cattle farm La Pradera. Blockchain technology enables this solution. Carlos Fernandez Mazzi, founder and CEO of the Swiss-based company Finka GmbH explains: “It is an innovative digital financial instrument with significant impact for financial inclusion and on the democratization of capital. It encapsulates the value creation of cattle ranching by converting grass into protein and into cash.
The minimum investment amount is CHF 500, which gets the retail investor 500 Finka Tokens in return. The number of tokens that are still available for sale is about 4.2m (out of 9.5m tokens in total; status June 2021).
LAUNCHING THE FINKA TOKEN – STEP BY STEP
The objective of tokenization is to create a financial instrument that converges a value-creation productive activity with crypto finance leveraging blockchain technology. The unique selling proposition is the innovation for fractional ownership, reduced transaction costs with multi-jurisdictional application and access. What does this mean?
Let’s leave La Pradera for a minute and head back to Zug – or more precisely, into the Crypto Valley located in Switzerland and Liechtenstein and stretching as far as Dubai.
This is the home of Inacta and its many partners. Here you can meet the experts, who can help you achieve all this – step by step.
Before the Finka token adventure could take off Carlos Fernandez Mazzi needed to found the Swiss-based company Finka GmbH. The company took the lead in the following process, having partners accompanying with every step along the way. Carlos Fernandez Mazzi: “The Finka token results from the collaboration with the most relevant players in Switzerland’s Crypto Valley.
It’s fair to say that Finka Token is a byproduct of the dynamic innovation environment within the Crypto Valley ecosystem.”
Below is an outline of the various steps involved in launching the Finka Token:
Step #1 – MME.
MME Legal is an integrated, cutting edge law, tax and compliance firm with offices in Zug and Zurich. Their employees helped with the initial corporate establishment.
Step #2 – Lakeside Business Center AG.
Lakeside introduced Carlos and his newly founded company Finka GmbH to the Crypto Valley and all the experts fostering new technology, digital assets and all-finance opportunities.
Step #3 – CV Labs.
CV Labs located in Zug offered workspace in an inspiring professional surrounding. CV Labs accommodates more than 130 of the leading blockchain projects in the industry and therefor offers unique networking and co-working possibilities to the team of Finka.
Step #4 – Inacta.
Inacta is an independent Swiss IT company with more than 80 employees driving digital transformation using information management and blockchain applications. It is the leading technology provider in Zug. Inacta’s part in this process is described in detail below.
Step #5 – Bank Frick.
Bank Frick based in Liechtenstein is a family-run enterprising bank serving intermediaries with a strong expertise in funds and emissions and a focus on blockchain banking. Here, Finka found all the needed banking services.
Step #6 – Froriep.
The Swiss law firm Froriep made itself a name for legal advisory on blockchain, legal construct and token design. It helped verify and securing the tokenization intentions of Finka from a legal point of view.
Step #7 – Private investors.
Now was the time for the private investors to enter the stage. They seed token development money to ignite the actual token creation process.
Step #8 – CoreLedger.
The company CoreLedger has offices in Vaduz and Baar. The experts of CoreLedger provided the token and blockchain platform that made the Finka Token work.
Step #9 – Tokengate.
Tokengate is the product of DSENT, a venture of Inacta. Tokengate provided the onboarding process with a KYC process to every potential buyer of Finka tokens.
Step #10 – InCore.
InCore Bank is a one-stop business-to-business transaction bank. As a Swiss corporation with a banking and securities dealer license, InCore Bank offers a comprehensive and modular range of services covering transaction banking for traditional and digital assets. InCore became the lead bank for the Finka Token distribution.
Step #11 – CV VC.
The early-stage venture capital investor CV VC focusing on startups that build on blockchain technology became the strategic investor for Finka.
Step #12 – Area2Invest.
Area2Invest provides the marketplace for listing the Finka Token.
Step #13 – Bitcoin Suisse.
Bitcoin Suisse is the oldest and largest crypto-financial services company in Switzerland. Finka choose Bitcoin Suisse as the preferred custody provider for their Finka Token.
Now, that’s a lot of steps. But then you want to be sure to have it all covered and have a proper setup. All those steps can take up to 6 months, depending on the tokenization project itself and a possible cross-border situation.
INACTA’S PART AS TECHNOLOGY PROVIDER AND NETWORKER
To enable this transformative innovation and to create the Finka Token, Inacta brought its many years of experience as leading technology provider for consulting and networking services to the table. In order to maximize the benefit for token investors, it was necessary to bring the token to the market with minimal costs and maximum ease of access.
As in other areas, these expenses can be minimized with the targeted use of innovative technologies, and this is where Inacta's involvement was essential.
Through their expertise, it was possible to achieve a significant reduction in the cost of blockchain-based corporate finance, largely through Inacta’s standardization of all processes.
This resulted not only in economies of scale, but also in specifications in terms of "best practice". Inacta provided the necessary components and integrated them in terms of processes, applications, and technology so that blockchain-based financing could come about.
At the same time, Inacta helped facilitate the coordination of all ecosystem partners involved in the creation of the Finka Token, from legal counsel to promotion and investor networking. This reflected their wide range of connections to the international crypto community from Crypto Valley, Switzerland to Vaduz, Liechtenstein, and Dubai.
Beyond the work of Inacta to create the Finka Token, a key element was the follow-up to token issuance – secure custody with Bitcoin Suisse.
After issuing the Finka token, it was important to ensure that token holders could store their Finka holdings with maximum security – while also ensuring flexibility and accessibility. In the first case, this meant utilizing a proven, cold storage solution with audited controls and proprietary technology developed and maintained in a secure location.
The Bitcoin Suisse Vault met these requirements very well:
1. Institutional grade and fully audited
Launched in 2018, the Bitcoin Suisse Vault was one of the first HSM based offline custody solutions. Not only is the technology of the Bitcoin Suisse Vault built and maintained by Bitcoin Suisse experts; it is also fully audited by external experts from professional audit firms. The Bitcoin Suisse Vault control systems have received ISAE 3402 Type 1 and Type 2 Reports from PwC and its code has been reviewed by Zühlke Engineering.
2. Client in control
The Bitcoin Suisse Vault provides unlimited personal blockchain addresses to its clients and supports hundreds of blockchain networks and tokens. Clients retain control of the private keys used to sign blockchain transactions through the Vault web interface from anywhere in the world.
3. Flexible approver policies
One of the advantages of tokenized assets is the ease with which they can be accessed and held by individuals as well as institutions. For this reason, it was important that a custody solution for the Finka token would also allow easy and flexible access without compromising security and control. Accounts in the Bitcoin Suisse Vault can be configured for a variety of needs with account roles and approvals that are matched to the individual client’s desired setup. This supports a full-fledged institutional setup with multiple different approval roles as much as a single-person crypto holder. In this way, tokens can be rapidly accessible but also protected with controls by trusted persons on the client side.
This final requirement mentioned above highlights again the unique nature of the Swiss blockchain ecosystem and the conditions which made it possible to issue the Finka token here in Crypto Valley – collaborating with the powerful system of partners mentioned.
As the Finka token was issued with the support of Inacta, Tokengate and CV VC in Switzerland and based on Swiss law, this proves again the strength and breadth of the Swiss blockchain ecosystem: Legal and regulatory certainty in a stable country in addition to the exacting standards of Swiss quality are of the highest importance.
CONCLUSION – BACK IN LA PRADERA
Through close collaboration, Inacta and Bitcoin Suisse helped establish an innovative new investment opportunity for investors of all sizes.
In addition to their rights to the net operating profit of the La Pradera cattle farm, holders of the Finka token also have the right to visit the La Pradera farm at any time. This makes it a truly unique asset, one that would not have been possible without the expertise and experience of Inacta and Bitcoin Suisse, together with the many ecosystem players in Switzerland’s Crypto Valley.
The La Pradera ranch has experienced over 20 years of cash growth and continues to thrive through its use of best-in-class management and proven leadership. It serves as the driving force behind the value of the Finka Token and the first of many such projects to emerge.
For further information about Finka GmbH and the Finka Token please visit https://www.finka.ch/en/