Morgan Creek Blockchain Capital is taking tokenization to the next level. The VC firm is set to convert paper shares of a company into digital token assets. These assets will then be issued to raise capital for the business.
The blockchain wing of Morgan Creek Capital Management, an investment advisor, announced Wednesday that it is working with Anexio Technology Services to convert all of its physical shares into an ERC-20 token. The ERC-20 standard allows for the creation of tokens on the ethereum network.
The company plans to raise $40 million by selling the tokens to accredited investors.
Morgan Creek believes tokenization is the future of the business process. Commenting on the company’s plans, Anthony Pompliano, a partner at the firm said:
“Once all assets are tokenized, then we believe the entire financial system will be more efficient and compliant. Morgan Creek is focused on tokenization because that’s where we believe there is less hype and more sustainable value being created.”
Tokenization, the process of issuing tokens as substitutes for sensitive data elements, is a concept that predates the emergence of the blockchain. However, many experts believe that the technology behind Bitcoin provides the framework for a more robust tokenization ecosystem. With benefits such as share registers for tracking ownership of tokenized assets and faster equity transactions, many firms are actively pursuing the development of functioning tokenization protocols.
With the uncertainty around ICO regulations, tokenization might hold the key to simplifying the blockchain-based capital raising economy. Nevertheless, we could be expecting more VC firms to explore tokenization of their shares.