Capital markets News

Law firm DLA Piper launches DLT security token platform

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One might expect DLA Piper to offer legal advice for security token issuance. However, the law firm has taken it a step further and is launching its own security token platform, TOKO. It says the distributed ledger technology (DLT) solution was developed with Aldergate DLS (digital ledger solutions), a startup incorporated in December 2019, which is wholly owned by DLA Piper.

“Aldersgate DLS and DLA Piper have spent an immense amount of time studying the asset tokenization challenge, the legal issues surrounding security token creation and fund raising, and the platforms needed to deliver such offerings at scale,” said Scott Thiel, Technology partner at DLA Piper. Thiel described the solution as at the proof of concept stage and it used the platform to tokenize a piece of art bought by several of the law firm’s partners.

DLA Piper outlined the typical benefits of digital assets and tokenization, including fractional ownership, asset liquidity, and accessing a wider range of investors. It positions the offering as unique because it includes DLA Piper’s legal experience.

This isn’t its first digital asset solution. Last year it collaborated with Tokeny for the Digital Securities Alliance to enable businesses to raise capital via their own websites. It was for a more limited scope – corporate capital raising as opposed to assets like art or real estate – although Tokeny offers the sort of solution provided by TOKO. However, we believe Tokeny primarily uses the Ethereum public blockchain but with permissioned transfers for know your customer (KYC). 

In contrast, in the TOKO case, the bulk of the system is on a permissioned blockchain Hyperledger Fabric. Plus, it adds the trust and transparency advantages of a public network by using the Hedera Consensus Service, which provides consensus and timestamping services. DLA Piper was in the first batch of organizations to join the Hedera Hashgraph governing council two years ago, alongside Nomura, Deutsche Telekom and others. Since then, Hedera’s council has expanded to include the likes of Google, IBM and Boeing.

Additionally, DLA Piper worked with blockchain startup Luther Systems for systems integration and Hong Kong-based BCW Group as Program Manager.

DLA Piper is also a member of the InterWork Alliance (IWA), which took over the Token Taxonomy Framework’s management from the Enterprise Ethereum Alliance. The InterWork Framework aims to add legal clauses that match up with token standards. DLA Piper is currently the only legal member of the IWA.