인프라 금융에 있어서 블록체인기술의 역할-인프라 토컨化(23-03-22)/World Bank

2008년 금융위기기간에 세계은행에서 많은 우려속에서 사상처음으로  그린본드를 발행한 이래 2021한해 동안만 1조달러규모의 지속가능채권이 발행되었듯이  인프라(사회간접자본)금융에 있어서 블록체인기술을 이용한 토컨증권발행을 장기적 관점에서 시도해 볼만하다. 미국/스위스/프랑스/룩셈부르그/리히텐쉬타인에서는 인프라토컨화가 시도되고 있지만 

토컨증권의 종류/정산/지배구조위험/디지탈토컨의 법적지위/스마트접촉의 법적 문제점/사이버보안등의 규제문제를 보완하여 시도해 볼만하다.

 

=Infrastructure Tokenization: Does Blockchain Have a Role in the Financing of Infrastructure?=

 

The purpose of this report is to assess whether digitizing the equity or debt financing used for infrastructure projects using blockchain, i.e., tokenized infrastructure, provides enough benefits to justify the use of this technology. The information presented here aims to inform the World Bank whether it should explore the possibility of tokenizing one of its infrastructure projects. The conclusions are based on interviews with tokenization start-ups, experts, and the review of current and planned regulatory frameworks in selected jurisdictions and use cases/pilots to date.

 

<Financing of infrastructure using blockchain technology: tokenization of assets>

 

Infrastructure investment is a means to generate long-term benefits to society with inclusive economic growth and well-being while contributing to a low-carbon transition.2 However, the sector is faced with several challenges including poor governance and management of infrastructure systems.3 Projects are also often large, capital intensive, and not immediately profitable. 4 Therefore, innovative mechanisms are required to leverage private financing and lower the costs of capital. It is also crucial to maintain information symmetry amongst stakeholders and provide investors with transparent data to make informed investment decisions. One of the foremost impediments is matching abundant supply of private capital to the demand for infrastructure.5 The use of distributed ledger technologies (DLT) like blockchain can potentially overcome many of the challenges that hinder the scaling of infrastructure. The efficiency of financing and management of infrastructure projects can improve by leveraging core features of the technology like decentralization, immutability, and transparency. 67 The blockchain is an immutable technological infrastructure designed to enable simultaneous access, validation, and record updating spread across several networks.8 These features make blockchain a disruptive technology capable of transforming businesses. The most common application of this technology in finance could be capital-raising through Security Token Offerings (STOs), and in post-trade processes, like clearing and settlement of securities. Another application of blockchain technology is the tokenization of real assets. Tokenization is the process of converting rights, a unit of asset ownership, debt, or even a physical asset into a digital token on a blockchain.9 This enables historically illiquid assets to be broken down into smaller units representing ownership and encouraging the democratization of finance.

The potential advantages of tokenizing “real-world” assets include: efficiency gains driven by automation and disintermediation, transparency, and greater liquidity and tradability of illiquid assets. The tokenization of assets can democratize the ownership of certain assets as a wider range of investors have access. As opposed to blockchain native tokens, like bitcoin, that only have value on the blockchain, realworld assets have an underlying value off-chain as well, backed by the real assets existing outside the ledger. The most prominent use of tokenization of real-world assets are securities (bonds and stocks), commodities (like gold), and non-financial assets (like real estate). The tokenization of infrastructure is claimed to address three objectives: financing initiatives,10 democratizing infrastructure,11 and increasing the efficiency of infrastructure management.12 These objectives are interconnected and enabled through the core features of blockchain technology— decentralization, immutability, and transparency. The data derived from infrastructure use and performance results can uncover operational inefficiencies as well as unlock new revenue streams for third-party planning on building new services and capital appreciation opportunities.13 The following are some specific activities related to infrastructure development that blockchain technology can improve:

      1. Improved project management - Contractual standardization - Financial standardization - Project preparation - Bridging data gap

      2. Improved investment environment - Financial engineering, risk allocation, and mitigation - Regulatory frameworks and capital markets - Quality infrastructure

 

<The use of smart contracts in infrastructure projects:>

 

Infrastructure management is often complicated, involving several contractors and subcontractors. Contractors are usually entrusted with the responsibility to submit the correct subcontract amounts. However, contractors often overstate the amount driven by the vested interest of increasing the mark-up chargeable by the vendor. Overstating amounts can occur as incorrect recordings of the sub-amount or application of tax, union fees, or other statutory charges. Manual effort is then required to verify and rectify these amounts, which is both cost and time intensive.

The use of smart contracts14 can improve the transparency of the process by verifying invoices and linking them to master data in real-time blockchain database.

The report proposes a three-way match of the invoice for implementation:     

 a. Purchase order/ Scope of work: This contains the list of activities contracted to subcontractors by a major contractor/owner representative. The invoice should match and reflect these activities approved by the contractor/owner representative.

  b. Certified progress: This contains activities completed by the subcontractor and certified by the supervisor designated by the major contractor. This progress should match and be appropriately demonstrated as completed.

 c. Master data: This contains the basis of the invoice consisting of the rate list (for each activity), activity code list, mark-up list, and acceptable operations ratios. For instance, operator cost to equipment cost, overhead cost to labor cost, and logistic cost to overall cost. This three-way matching with the invoice validates the contractual details entered by contractors and ensures the costs and operational ratios are set within the established parameters. Blockchain enables transactions to contain all aspects of the contract and invoices while tracking any change to the scope of work and progress on the master data. Any change to the contract or invoice will be visible to the owner, the prime contractor, and subcontractor simultaneously. This way of smart contracting also curbs the risk of non-compliance by contractors. The embedding of pre-determined operating ratios for each activity optimizes the process by triggering an alert to all the stakeholders—the owner, main contractor, and subcontractor in the event of non-compliance. This enhanced transparency will reduce cases of non-compliant spending and highlight inefficiencies along the supply chain. Based on this assessment, companies can reallocate resources towards activities that will facilitate higher-quality subcontractor work. Furthermore, an automated process enables real-time resolution of changes to orders and claims reducing ambiguities and potential mistakes. Smart contracts enable the programming and auto-execution of various operating scenarios to transparently verify invoices as per the terms of the contract. This increases transparency in contract administration and reduces the need for a full-time contract administrator. To summarize, tokenization has the potential to transform infrastructure financing as we know it. It could democratize access to markets while ensuring fairness and security. However, there are several obstacles including legal and regulatory challenges that hinder the scaling of the technology and question its applicability.

 

<Tokenization of infrastructure – Risks and Considerations>

 

Despite the potential advantages associated with infrastructure tokenization, the process is legally and technically complicated, which is hindering the adoption of blockchain technology. While in traditional securities each individual asset type is subject to local regulations, tokenization enables automated compliance with tokens being traded. This can raise new concerns such as overuse of computational infrastructure, speculative arbitrage because of unclear regulatory frameworks for issuance and compliance enforcement, and community participation in overcoming potential privacy infringement issues.

The following are the most prominent risks associated with asset tokenization, which need to be carefully considered as the key challenges are regulatory rather than technologically related

  : • Tokenizing different security types: Infrastructure tokens can represent a variety of security types and ownership interests, including the ownership of an infrastructure asset, an equity interest in the company owning the asset, a debt position secured by the asset, or the revenue stream generated by the asset. The nature of the security being tokenized determines the regulation applying to the token. At the same time, security regulations can differ and are often inconsistent across jurisdictions. This raises the question whether infrastructure tokenization can democratize the asset class, or it would only target the usual private equity/debt investors.

   • Lack of legal clarity and governance risks: The lack of a globally recognized code of conduct/tokenization standard for managing digital assets remains the greatest challenge to decentralized technology. The lack of a globally acceptable standard prevents legal clarity on key provisions relating to claiming ownership rights, integration of anti-money laundering and knowyour-customer (AML/KYC) requirements, admin rights, and integration with secondary markets are not considered. The problem of technology evolving much faster than regulations prevents the “borderless nature of blockchain” from truly achieving its potential.

   • Legal status of digital tokens: Tokenized securities have to comply with legal regulations like conventional securities law. Only a few jurisdictions recognize tokens as digital assets. The tokenization of assets enables the creation of a holding vehicle for the purchase of loans and other assets. The shares of this vehicle are then sold to participating investors providing diversification and reducing the risk of ownership. Like traditional special-purpose vehicles (SPVs), tokens must also represent a legal entity that owns the infrastructure project(s). However, most jurisdictions around the world do not recognize infrastructure tokens to represent an independent investment, questioning the legal status of infrastructure tokens. These tokens can be traded either through a decentralized exchange (DEX) or by listing them on eligible crypto exchanges providing secondary market liquidity for an otherwise illiquid asset class. Additionally, virtual tokens are subject to more stringent regulations in comparison to regular securities.

   • Legal status of smart contracts: Smart contracts are the core of many blockchain applications. They implement pre-established unchangeable agreements programmed on the blockchain without requiring human intervention. These contracts execute instructions like receiving dividends. Despite its critical importance, there is no jurisdiction that provides a legal definition for smart contracts. Experts have identified few obstacles to providing smart contracts with a legal

status—first, the need to maintain technological neutrality in regulations; and secondly, the multiple standards and functionalities available for specific codes and blockchains. As a result, the legal status of smart contracts is yet to be defined in many jurisdictions, resulting in a lack of enforceability and giving rise to consumer protection concerns.

   • Cyber security concerns: The use of smart contracts also raises major cybersecurity concerns. The characteristic features like automation and immutability increase its vulnerability to cyber hacks and expose investors to fraudulent practices. To ensure cyber security, it is important for tokens to comply with AML/KYC. It is critical to maintain accountability of ownership of tokens that would require collaboration with security token exchanges to track ownership. This compliance requires expert supervision and subsequently increases the costs to an issuer.

 

<Examples of conducive regulatory frameworks for implementing tokenization of infrastructure>

 

The use of blockchain technology has the potential to disrupt how infrastructure is currently being financed if there is an enabling regulatory environment. Countries with a strong legal framework for DLTbased securities present an attractive destination for issuing these security tokens and participating in the token economy.

The following are a few leading examples

   • United States: As an emerging technological solution, the tokenization of infrastructure is subject to different laws at the federal and state levels. In 2019, 28 states introduced legislation for blockchain, with 27 bills and resolutions enacted and adopted. In September 2020, the Office of the Comptroller of the Currency (OCC) allowed national banks to provide permissible banking services to any lawful business they choose, including cryptocurrency businesses as long as they effectively manage the risks and comply with applicable law including those relating to the AML and Bank Secrecy Act (BSA) provisions.

    • Luxembourg: Luxembourg is currently one of the most conducive jurisdictions for infrastructure tokenization. Its legal framework is designed to enable the benefits of blockchain that are the most relevant and beneficial for the country, such as using blockchain to eliminate intermediaries in the asset management industry.

    • Liechtenstein: Liechtenstein developed a holistic regulatory framework dedicated to the token economy. In January 2020, Liechtenstein became the first country with comprehensive regulatory guidelines under the Blockchain Act or Token and Trusted Technology Service Provider Act, the Gesetz über Token und VT-Dienstleister 54/2019 of Liechtenstein.

     • Switzerland: In 2020, Switzerland passed the Distributed Ledger Technology (DLT) Act enabling innovation using ledger-based technologies. Unlike in the case of Liechtenstein, this DLT act is not a self-contained law but is a blanket act modifying existent civil law (in respect of securities), financial market infrastructure law (DLT trading facility), the Banking Act, and bankruptcy regulations. A key feature of the act is the formal recognition of uncertified registered securities or digital securities that can be transferred without financial intermediaries. This provides legal certainty on the ownership and transfer of those tokens.

     • France: France was one of the first countries to provide a legal standing for blockchain and to allow the use of the technology for registration and transfer of securities. The “Blockchain Order”

was introduced in 2017, a regulatory framework established in French law to govern the representation and transmission of unlisted financial securities via DLTs. In 2019, the Plan d’Action pour la Croissance et la Transformation des Entreprises, also known as the Loi Pacte (the “Pacte Law”), was enacted in France to foster entrepreneurship and innovation, facilitating the growth of businesses and creating jobs. The law is said to govern blockchain applications and provide guidance to crypto asset service providers (CASPs) on the issuance and management of DLT related services. • European Union (EU): As a part of the EU Digital Finance Package in 2020, the European Commission published the draft Regulation for Markets in Crypto Assets (MiCA) to foster innovation and competition in digital finance while controlling associated risks. Largely inspired by the French PACTE Law of 2019, the regulation intends to regulate players in crypto markets rather than the assets themselves. The regulation will apply to any person issuing crypto assets, or associated services. However, will not apply to security tokens that are already subject to existing EU regulatory regimes. Applicability to emerging markets Emerging markets and developing economies (EMDEs) currently lag behind in both the resources required for developing pilots, as well as regulatory frameworks for governing projects. However, the tokenization of infrastructure has the potential to positively impact EMDEs the most. The financing of infrastructure in EMDEs is faced with government deficits, issues of transparency and insufficient financial efficiency, as well as the lack of performance tracking, which tokenization can address. Tokenization in developing countries can elevate private sector confidence via improving infrastructure asset liquidity, while opening access to small-scale projects and enlarging participation in infrastructure development. EMDE governments can benefit from prospective administrative and financial efficiencies brought about by automated auditing, enhanced project monitoring, and lower financing costs. Smallscale projects often deliver the most economic and social impact per dollar spent. However, these projects face barriers to financing due to high transaction costs due to their small size. By tokenizing small scale infrastructure projects, due-diligence and transaction costs can be decreased significantly. Taken together, tokenization has the impact to transform both the economies and people’s lives in EMDEs.15

However, to unlock the complete benefits of blockchain through tokenization, it is important to carefully examine and overcome the potential risks and barriers in EMDEs through:

       a. Regulatory harmonization: For mainstream adoption through a global user base, STO regulation of different jurisdictions needs to be harmonized. In the EMDE context, policymakers need to update the legal and regulatory frameworks to address the opportunities and risks associated with tokenization. Establishing the legal status of asset-backed tokens and smart contracts must be prioritized. Taxation policies should be modernized, such that asset tokens are aligned for tax purposes. A careful balance of regulation should be maintained to ensure the market is both

secure and favorable for the private sector to participate in. Experts have proposed multilateral development banks (MDBs) with other nongovernmental organizations initiate a working group to develop a process to test” low-hanging fruit” applications towards more broadly defined infrastructure investment domains.16 A hybrid globalized governance and reporting system to integrate the specific tokenization requirements of target countries can be established to create global alignment of smart contracts.17

      b. Pilot testing and sandboxes: There is a need for developing pilots and regulatory sandboxes for promising-use cases to gain practical insights and test the advantages and constraints in a realworld setting.18 To test and learn about the technology, some jurisdictions like South Africa and the Philippines19 have already established regulatory sandboxes to allow for a more flexible approach in consultation with the regulator. Sandboxes create a safe space in which businesses can test innovative products, services, business models, and delivery mechanisms in a live environment without immediately incurring all the normal regulatory consequences. 20

   c. Capacity building: Tokenization is a novel concept using a nascent technology. It requires capacity building of decision and policymakers to facilitate the development of regulatory frameworks. 21 National governments and international organizations like the World Bank can work with researchers and industry practitioners to establish case studies for specific countries to assess the local opportunities and risks associated with tokenization.

 

<Conclusions and main takeaways>

Blockchain technology has the potential to deliver a wide range of benefits through its ability to enforce trust in a trustless environment. The exponential growth of cryptocurrencies and tokens demonstrates there is an increasing acceptance of this new asset class, and the benefits of this technology are more and more recognized among financial market participants. At the same time, it is important to make the distinction between crypto as an asset class and tokenized securities. In the case of the latter, which is the focus of this paper, blockchain only serves as a digital vehicle or technological enabler. A tokenized equity or tokenized debt have similar financial characteristics and are regulated the same way as their traditional “off-chain” equivalents. Regulation, or rather the lack of regulation designed for tokenized securities, is the main barrier of using blockchain for the financing of infrastructure. The extent to which national security regulations accommodate tokenization can vary significantly across jurisdictions. As pointed out earlier, while there has been some notable progress in a few countries, there is still a lot of work to be done on the regulatory front before the full potential of tokenized securities can be realized.

Another challenge is how tokenization can deliver on its value proposition to democratize finance, while complying with securities regulation. Indeed, it has the potential to provide access to a wider range of investors, including retail, to asset classes that were traditionally off limits. Investors seeking to have exposure to infrastructure normally have to become limited partners (LPs) in private equity or debt funds. However, due to their large minimum ticket sizes (over $1 million), these funds are only a viable option for high-net-worth individuals (HNWI) or institutional investors. Tokenization can decrease these minimum sizes significantly, while making these investments more liquid. At the same time, many of the infrastructure tokenization projects to date were only accessible for accredited investors due to securities regulation. While the requirements differ across jurisdictions, generally becoming an accredited investor is not a possibility for retail investors. This is another area where financial regulation needs to evolve to better accommodate this new technology—otherwise tokenization cannot fulfil its promise to democratize investments. In light of this, should the World Bank further explore infrastructure tokenization? The World Bank should consider tokenizing one of its infrastructure projects if it wants to pursue any of the following objectives:

• Drive change in financial regulation to better accommodate the use of security tokens

• Demonstrate leadership in the use of blockchain technology

• Interact with the crypto economy

When the World Bank issued the world’s first green bond in 2008, the issuance has probably cost more than the traditional alternative. However, that transaction created the blueprint for today’s sustainable bond market that has grown exponentially over the years, reaching $1 trillion issuance in 2021 alone.22

That green bond defined what should be the eligibility criteria for the use of proceeds and what to include in an impact report. It also provided a new model on how different stakeholders, such as investors, development finance institutions (DFIs), and scientists, could collaborate on a new bond issue. It also formed the basis for the ICMA Green Bond Principles that is still being used to this day by the large majority of green bond issuances.23 This is where the opportunity lies also in the context of infrastructure tokenization. The decision whether the World Bank should explore this technological solution further should not be made based on the expected short-term benefits of a pilot. Instead, the question is what the Bank’s long-term aspirations are in paving the way for the wider use of blockchain technology in the financing of infrastructure.

 

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