The proposed ERC20 extension smart contract makes it possible for Swiss corporations to tokenize their shares
For the German version of this press release, click here.
For the French version of this press release, click here.
In October 2018, the Capital Markets and Technology Association (CMTA) published a "blueprint" for the tokenization of shares of Swiss corporations. Based on a legal advice provided by Prof. Dr. Hans Caspar von der Crone from the University of Zurich, the blueprint describes the process through which shares that have already been issued pursuant to Swiss corporation law can be “wrapped” into digital tokens, so that the tokens and the underlying shares are tied to each other in a manner that prevents the shares from being transferred without the corresponding tokens and vice-versa.
Since publication of CMTA’s blueprint, several Swiss companies – among which Mt Pelerin and Tokenestate – have used CMTA’s tokenization model to issue tokenized shares.
CMTA’s blueprint assumes that issuers will produce so-called "smart contracts" to create digital tokens on blockchain platforms such as Ethereum. The smart contracts used in this context must have certain properties (e.g. exclude any transfer of fractions of tokens) so that the tokens "behave" in a manner that is consistent with the shares which they represent.
To facilitate the use of its tokenization model by issuers, the CMTA has established an ERC20-compatible token called "CMTA20", which is a Solidity smart contract for the Ethereum platform, with functionalities required to implement the tokenisation model for equity securities of Swiss corporations in accordance with CMTA’s blueprint. The CMTA20 smart contract was designed by CMTA’s Technology Committee, with contributions from Lenz & Staehelin, Mt Pelerin (source code lead author), Swissquote, Taurus Group and Tokenestate.
CMTA is consulting on the smart contract, in order to receive feedback on issues such as functionality, security or interface design.
Dr. Jean-Philippe Aumasson, chair of CMTA’s Technology Committee and a member of the Executive Committee of Taurus Group, said: "Providing technological tools to facilitate the tokenization of assets is at the heart of CMTA’s mission. We trust that, by making the code of the CMTA20 smart contract open source and available to the public, we will facilitate the use of tokenized securities and ultimately contribute to our goal to democratize issuers’ access to capital markets".
Mr. Fedor Poskriakov, General Secretary of the CMTA and a banking partner at the law firm Lenz & Staehelin, commented: "CMTA’s tokenization model provides flexibility to issuers, who do not depend on any third party platform or service provider for the issuance and transfer of their shares. Shares tokenized pursuant to CMTA’s model can be traded on any platform that supports ERC20 tokens. The issuer can also decide at any time to retire the tokens and issue certificated shares or to have its shares deposited with traditional central securities depositaries. This is an extremely powerful proposition. The CMTA20 smart contract is a further step toward implementation of CMTA’s tokenisation model".
CMTA20’s code is copyright (c) Capital Market and Technology Association, 2018-2019, and is released under Mozilla Public License 2.0. It is available at https://github.com/CMTA/CMTA20.