Yesterday the State of Colorado passed legislation requiring the state treasurer to explore using security tokens for state capital financing by March 2023. If the treasurer recommends a go-ahead with blockchain-based funding, an additional law to authorize security tokens would need to be passed. Real estate assets would back the security tokens.
The motivation for the feasibility study is to reduce costs. It’s argued that it would broaden the pool of investors, and in doing so, it expects to achieve a lower interest rate. In addition, it believes it could cut funding costs associated with underwriting fees by reducing the dependence on commercial banks and institutional investors. It also hopes to make the investments available to Colorado citizens.
Colorado can’t raise long term funding without asking for citizen approval. As a result, it tends to raise money either by short-term financing of tax receipts or leasing arrangements.
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