© 2020 Black Man­ta Cap­i­tal Part­ners S.à r.l.
  • en
  • de
Security tokens secured by mortgage - possible in Austria?

Secu­ri­ty tokens secured by mort­gage — pos­si­ble in Aus­tria?

So far, secu­ri­ty tokens have main­ly been used for tok­enized prof­it par­tic­i­pa­tion rights. Yet, are the tokens also applic­a­ble to real val­ues such as real estate in an Aus­tri­an land reg­is­ter, which has rather strict reg­u­la­tions?

 

Cura­tors Act (KurG) of 1874 as a solu­tion:

The short answer is: Yes, it is actu­al­ly pos­si­ble to mort­gage secu­ri­ty tokens!

Inter­est­ing­ly enough, this is due to an almost for­got­ten law from 1874, the so-called Cura­tors Act (in Ger­man Kura­torenge­setz or KurG), which con­tains a pro­vi­sion by which the hold­er of a right in rem to a prop­er­ty is not required to make a per­son­al entry in the land reg­is­ter.

Instead, a com­mon rep­re­sen­ta­tive of the cred­i­tors is entered in the land reg­is­ter. In this way, token hold­ers could hold the lien with­out hav­ing to be entered in the land reg­is­ter them­selves.

Even if no secu­ri­ty token was known in 1874, it is not unrea­son­able to apply this law to dig­i­tal val­ue units as well. The KurG is also applic­a­ble to secu­ri­ties trad­ed in the secu­ri­ties giro, which are also not phys­i­cal, but in prin­ci­ple, only book­ing lines on online secu­ri­ties accounts — i.e., de-mate­ri­al­ized secu­ri­ties.

 

Pre­req­ui­sites for Secu­ri­ty Tokens under the Cura­tors Act:

In order to be sub­ject to the Cura­tors Act, secu­ri­ty tokens must be in the form of a par­tial deben­ture. From an eco­nom­ic point of view, the token should, there­fore, be a loan and be both inter­est-bear­ing and repayable.

Fol­low­ing the appoint­ment of a joint rep­re­sen­ta­tive in accor­dance with § 15a KurG, every new own­er of the tokens now has the direct lien, with­out it hav­ing to be cor­rect­ed in the land reg­is­ter. Each token would thus be what the KurG calls a par­tial bond. The total issue vol­ume is thus divid­ed among a cer­tain num­ber of tokens.

If all these require­ments accord­ing to the KurG are ful­filled, it is actu­al­ly pos­si­ble to mort­gage secu­ri­ty tokens and each token hold­er would have an inde­pen­dent claim in rem from the mort­gage.

State­ment  BMCP: for us, this rep­re­sents a very inter­est­ing approach to this top­ic, which we will cer­tain­ly observe care­ful­ly in the future.

Ques­tion: How inter­est­ing is this form of mort­gage secu­ri­ty tokens for investors?