There are several instances when payments need to be settled and processed in the context of a token offering. Additionally, there are multiple ways, how these payments are processed.
When a token offering is conducted – this is also called the primary issuance – at some point investors will pay for the asset that they bought. This part is covered in the next section on Payments from investors.
After a token offering is completed – this is also called the post-trade part or life-cycle management part – investors typically receive payments. The triggers for such payments are for example coupon payments on bonds, dividend payments on equity instruments, repayments of bonds, share buybacks etc. This part is covered in the section on Payments to token holders.
Payments can be settled via the following currencies:
- Via cryptocurrencies (e.g. Bitcoin, Ether, Stellar Lumens etc.)
- Via stable coins (USDT, USDC etc.)
- Via fiat money (USD, EUR, GBP, CHF etc.)
There are several payment methods how payments can be conducted:
- Via a paying agent (typically a bank) for fiat
- Via a regular business bank account of the issuer for fiat
- Via the investor wallet directly to the issuer wallet in crypto or stable coins
- Via a payment service provider for fiat which offers a variety of payment methods (e.g. credit card, PayPal, direct debit etc.) – while this option can be convenient, it is almost never used in the context of token offerings because the costs of easily 1 to 2% of the processed payments volume are usually too high from the perspective of a an issuer relative to the margins that can be achieved with financial instruments
- Via a crypto payments processor that will let the issuer accept payments in crypto and convert them immediately to fiat and pay out to the issuer's bank account
From the methods above, typically the first three are most commonly used and compatible with the Bitbond Offering Manager.
It always depends on the context and especially the types of investors that an offering primarily caters to, which currencies and payment methods make the most sense. To evaluate this and find the best solution is normally part of a concept and pilot phase where Bitbond supports the issuer / arranger prior to the implementation of the Offering Manager.