Revolutionizing Asset Tokenization: The Liqwith Plaza PLUS Concept

In the rapidly evolving world of financial technology, Liqwith has taken a bold step forward with the release of Plaza PLUS, Version 3 of their Real-World Asset (RWA) token platform. After seven years of meticulous research and testing, Plaza PLUS promises to bring a compliant, efficient, and secure asset tokenization platform to investment funds, all within the European regulatory framework.

The Birth of Plaza PLUS

Launched in 2024, Plaza PLUS addresses the critical challenge faced by many tokenization platforms: compliance with existing regulations. During the ICO boom of 2017, launching and selling tokens was relatively straightforward, with minimal legal or regulatory oversight. However, this ease came with significant uncertainties regarding the legal status of tokens, especially those linked to real-world assets such as shares, royalty rights, real estate, or physical commodities.

Navigating Regulatory Waters

Tokenizing RWAs introduces a tidal wave of regulatory requirements, primarily governed by European legislation. These regulations vary between member states, making compliance a complex and daunting task. Liqwith’s objective was clear: to develop a platform that not only complies with all current regulations but also minimizes regulatory burdens by leveraging blockchain technology for peer-to-peer transactions.

Overcoming Legal Hurdles

Despite significant progress, challenges remain. For instance, in Spain, tokenizing and transferring shares via blockchain necessitates a notary deed. Conversely, in the Netherlands, the process is more straightforward, allowing for the creation and transfer of depository receipts without a notary. The Netherlands’ clear regulations and favourable tax laws make it an ideal location for RWA tokenization. In other countries, a thorough legal investigation is necessary to navigate local regulations.

Simplifying Compliance with Plaza PLUS

Plaza PLUS minimizes regulatory burdens by focusing on direct transactions between two parties. Traditional regulations target third-party intermediaries such as banks, brokers, exchanges, and custodians. However, these regulations are less stringent when two parties engage in a direct transaction. For example, if John wants to sell shares to Tim directly, they can draft an agreement and execute the transaction without involving intermediaries, provided the transaction value does not exceed €5 million in 12 months. Beyond this threshold, an official prospectus approved by the Netherlands’ Authority for Financial Markets is required.

Harnessing Blockchain for Seamless Transactions

Blockchain technology is the backbone of Plaza PLUS, enabling peer-to-peer transactions between geographically separated parties. These transactions are governed by smart contracts, ensuring immediate and verifiable transfers of assets and payments without third-party involvement. The transparency and security provided by blockchain eliminate the need for trust in intermediaries, recording each transaction permanently and immutably.

Ensuring Compliance and Security

To facilitate compliant peer-to-peer transactions, Plaza PLUS adheres to AMLD5 regulations. Users must undergo KYC (Know Your Customer) checks and sanction list verifications. Each user is required to have a non-custodial digital wallet, exclusively linked to them, to sign transactions and securely store assets and payment credits.

Equity sellers on the platform must legally own the equity and comply with country-specific regulations, leveraging exemptions like the €5 million annual limit and simplified investment risk documents. Plaza PLUS functions as an advanced bulletin board where sellers issue RWA tokens governed by smart contracts, and buyers purchase these tokens using investment credits, ensuring compliance and eliminating the risk of third-party manipulation.

Conclusion

Liqwith’s Plaza PLUS represents a significant advancement in asset tokenization. By ensuring compliance with regulatory requirements and leveraging the power of blockchain technology, Plaza PLUS offers a secure, transparent, and efficient platform for tokenizing real-world assets. This results in significant time- and cost savings for Investment Funds, allowing them to offer more investment opportunities to their investors, while exponentially cutting the cost of capital for the seller.

As the financial technology landscape continues to evolve, Plaza PLUS is poised to lead the way in compliant and innovative asset tokenization.