While companies and investors alike continue to debate whether assets like XRP and ETH are securities, there are a select few industry participants that have embraced the classification. One such company is Freeport, which has just announced the successful completion of its Regulation A review by the Securities and Exchange Commission (SEC).
What it Means
With the SEC having completed this review, Freeport indicates that it is now primed and ready to launch its anticipated platform built to support the sales of digital securities in the form of tokenized fine art.
Tokenization has been a hot-topic lately as it is now being viewed as a viable means for gaining exposure to previously inaccessible asset classes. In addition, it has the ability to provide liquidity to traditionally illiquid or low-liquidity assets like automobiles, art, spirits, and more. Major investment firms like Blackrock have brought attention to this potential with its CEO, Larry Fink, stating that,
“For the asset management industry, we believe the operational potential of some of the underlying technologies in the digital assets space could have exciting applications. In particular, the tokenization of asset classes offers the prospect of driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors. At BlackRock we continue to explore the digital assets ecosystem, especially areas most relevant to our clients such as permissioned blockchains and tokenization of stocks and bonds.”
Interestingly, Freeport has noted that its platform will also function as a ‘community gallery', providing investors with a bit of extra value/incentive. Here, Freeport states that,
“Customers can display their pieces in a high-resolution personal gallery, select frames, and view other community members' galleries with rich social interactions that include comments, likes, and more.”
For decades, fine art has proven to be a sound investment for those that can afford it. Unfortunately, access is typically reserved for the super-rich that can afford to purchase works outright, and stand to have capital tied up for long periods of time. Beyond a steady increase in value over time, it is for these reasons that fine art is ideal for tokenization, as it will allow for fractionalization and eventual secondary market trading.
For Freeport to get off to a good start, it needs to offer fine art for tokenization with widespread appeal that is expected to increase in value over time. To this end, the platform has knocked it out of the park with its first collection comprised of 4 iconic prints by famed artist, Andy Warhol.
Andy Warhol is often associated with pioneering the ‘pop art movement' throughout the 1960's. Sixty years later, and his aesthetic still greatly influences modern media.
The four pieces which comprise the collection set for tokenization through Freeport include,
How it Works
For the aforementioned collection, Freeport notes that its tokenization efforts will take place on the Ethereum blockchain. Up to 1,000 eligible investors will be able to gain exposure to each piece with a minimum of 10 shares, as the prints are each is fractionalized in to 10,000 shares.
Essentially, this means that exposure to each can be attained for potentially as little as 1/1000th of what it would normally cost a single investor. Naturally, as the value of each piece increases over time, investor holdings increase proportionately to the size of their holdings.
Upon announcing the completion of its Reg A review by the SEC, Freeport CEO, Colin Johnson, took the time to comment.
“As more and more value moves on-chain, fractionalized art is increasingly being sought after by a younger, yet less financially flexible, class of investors. Our platform goes far beyond just fractionalizing shares of fine art into security tokens—we’ve built a fully-immersive and interactive platform hosting an art-centric community and redefining the ownership experience surrounding fractionalized art.”
Real-World Asset Tokenization
Tokenization of real-world assets is finally beginning to take off. For those interested in learning about more of the companies that have acted as trailblazers, beyond Freeport, just look to the following.
- PhillipCapital Tokenizes Fine Wine
- Wave Financial Tokenizes Kentucky Whisky
- CurioInvest Tokenizes a Ferrari F12tdf
Interestingly, Freeport appears to be offering a similar service to TheArtToken – another endeavour based on the tokenization of fine art that was launched by FineArtDigital in 2018.