Independent Evaluation Framework for Security Tokens

In April 2020, the Competence Center Banking and Finance of the University of Applied Sciences St.Gallen, in cooperation with renowned practice partners, will start a research project co-financed by the Swiss Agency for Innovation Promotion (Innosuisse) under the title "Independent Evaluation Framework for Security Tokens". The goal of this practice-oriented research project is to create more transparency and comparability in security tokens (digital assets such as stocks and bonds).

Project for and with the involvement of all stakeholders

In addition to an urgently needed standardization in the field of security tokens, a comprehensive and broadly supported certification process is to be developed. Such a certification will serve both companies that finance themselves through the issue of security tokens and banks that maintain business relationships with issuers as well as private and institutional investors.

Within the framework of a broad-based investigation, the diverse needs of all stakeholders (e.g. banks, stock exchanges, regulators, lawyers, notaries, auditing companies, trustees, technology companies, associations, issuers, investors, and platform providers) will be comprehensively surveyed in order to develop a standardization and certification for security tokens that is recognized by the market.

STOs as regulated version of ICOs

In 2017, a real hype about Initial Coin Offerings (ICOs) has been created. Within the framework of an ICO, mainly utility tokens (sub-category of ICOs) were issued, which allow buyers to use a specific application or platform. In the meantime, there has been a movement away from utility tokens and towards security tokens.

Security Token Offerings (STOs) are another subcategory of ICOs. It is a regulated version of financing in which investors invest in digital assets that are held on a blockchain in a decentralized and forgery-proof manner. The blockchain technology thus offers STOs the possibility to "tokenise" any "classic" assets and make them tradable. For SMEs in particular, this digital form of financing could provide simplified and more efficient access to capital markets in the future. From the investor's point of view, security tokens offer new or further access to various asset classes. They also differ clearly from utility tokens and cryptocurrencies such as Bitcoin. The standardization and certification resulting from the research project should help to create transparency and trust in order to further advance the promising market for security tokens.

Interdisciplinary cooperation

The research team consists of several practice partners who have profound experience and expertise in the field of blockchain and security tokens. In addition to fedafin, the following practice partners will participate in the applied research project: PFlab (innovation laboratory of PostFinance) and Hypothekarbank Lenzburg, the law firms VISCHER, Walder Wyss, Kaiser Odermatt & Partner, the start-up company Drakkensberg AG and the technology partner KORE Technologies. In the course of the project, further companies are to be brought on board in order to support the standard as broadly as possible.

If you are interested in participating, please contact us by e-mail at the following address:

Contact information

Pascal Egloff, Project Manager

FHS St.Gallen

Competence Center for Banking and Finance

+41 (0)71 226 13 73