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  • Laura Pamatian

Online Capital Formation - RegA and Tokenization

Tokenization is the process of representing real-world assets as digital tokens on a blockchain or other distributed ledger technology. These tokens can be bought and sold like traditional securities, allowing investors to purchase ownership stakes in a variety of real estate assets.


Using a Security Token Offering (STO) to raise capital through a Regulation A (Reg A) offering can involve the following steps and would be sheppard and monitored by the proper compliance service providers:

  1. Identify the real estate asset you want to tokenize and determine its value. This could be an existing multi-family property, new ground up development or virtually any other type of real estate asset.

  2. Create a business plan that outlines how you plan to use the capital raised through the Reg A offering. This should include details about the asset being tokenized and how the funds will be used.

  3. Register the offering with the Securities and Exchange Commission (SEC) and state securities regulators, if required. This involves filing a Form 1-A with the SEC and obtaining qualification from the relevant state regulators.

  4. Create the digital tokens that represent the asset being tokenized. These tokens can be created using a technology provider, specializing in tokenization.

  5. Promote the offering to potential investors. This could involve using marketing materials, such as a prospectus or pitch deck, to explain the benefits of investing in the asset being tokenized.

  6. Sell and issue the tokens to investors through an SEC compliant platform and service provider that supports the buying and selling of securities, such as a registered broker-dealer or alternative trading system (ATS).

Tokenization can offer investors a new way to access a wide range of assets and can provide real estate companies with an alternative way to raise capital. However, it is important to carefully consider the legal and regulatory implications of tokenization and to seek professional guidance before embarking on a Reg A offering.


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