🪙Tokenization
Backed Assets issues tokenized tracker certificates which track the value of publicly traded securities. Backed products, such as xStocks, are tokenized by Backed Finance AG, the parent company, and are freely transferable tokens.
More details can be found on the Issuer website.
Bankruptcy Remoteness
Every xStock is fully collateralized by the corresponding underlying asset (publicly traded equity or ETF) held in secure, segregated accounts.
Collateral is held with regulated custodian banks or brokers in Switzerland and the United States.
Each product has its own dedicated sub-account to ensure asset segregation.
Collateralization is governed by a three-party Account Control Agreement involving:
The Issuer – Backed Assets (JE) Limited
The Custodian Banks
An Independent Security Agent
The Security Agent:
Has full viewing rights over the collateral accounts
May take control of the accounts if it determines that token holders’ rights (as defined in the approved prospectus) are not being upheld
The structure of the Backed group is designed to insulate token holders from broader corporate risk. The key features include:
Backed Finance AG is the Swiss parent entity that handles operations and employs most personnel.
Backed Assets (JE) Limited is an SPV, a fully owned subsidiary of Backed Finance AG. Dedicated solely to the issuance and redemption of xStocks. It maintains its own bank and collateral accounts and conducts AML onboarding in accordance with Jersey law.
All product-related assets are held in separate, product-specific collateral accounts. Operational funds are managed in distinct accounts. No commingling of funds occurs.
In the event of issuer default:
The Security Agent will assume control of the collateral accounts
The underlying assets will be liquidated
Proceeds will be distributed to token holders in accordance with the terms defined in the prospectus and product documentation.
Accepted Funds
The process of tokenization starts when onboarded users transfer funds from a registered wallet or a bank account into an address managed by Backed. Currently accepted tokens or currencies are:
USDC
USDG
Once transfer is completed, the issuing process will start as described below.
Issuance
Issuance is the process of acquiring the underlying assets and issuing tokens in an equivalent amount, ensuring they are backed one-to-one by the underlying. Time to complete the issuance process varies by order size:
Small orders are completed automatically in one minute up to a soft cap, which is increasing.
Larger orders are completed in around ten minutes up to about four million.
Orders above four million can take up to a day, but usually only 30 minutes, to be filled.
Step-by-step:
Onboarded users that have passed verifications can access the Backed app or API to issue xStocks.
Through the app or API, onboarded users can send the amount of fiat and USDC to be converted to xStocks. The order is executed at market price.
Backed places an order with the broker for the equivalent amount of the underlying stock or ETF.
The broker makes the purchase, and sends the underlying asset to Backed’s custodian bank account.
Backed issues the onboarded user the equivalent value of the xStock to the address that has been provided and verified. The underlying is collateral for tokens in control of the user.
Redemption
Upon redemption, onboarded users can send xStocks to Backed in return for supported stablecoins or fiat, as Backed sells the underlying following a reverse process.
Fees
Backed Finance currently takes no fees for issuing or redeeming xStocks. There is no management fee at present.
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