Digital Assets Management Raising

Funds with TOKENISATION RWA

Dr Nicky Okoye

I have received a lot of positive feedback on my article, which dealt with the Tokenisation of Real-World Nigerian assets. Only a very few people, nay-sayers, indicated that they will believe what I am proposing only when they see it. They doubted Tokenisation as a concept and challenged me to provide real-world examples of its successful implementation across the Western World. I will do two things in this article. First, I will offer a virtual simulated case study of an imaginary oil field seeking to raise funding through a tokenisation process designed and developed by the Global Investment Advisory Community and its international institutional investment partners. Secondly, I will provide a few real-world cases where tokenisation of real-world assets has been accomplished, and yes, these are Western World examples.

Simulated marginal oil field Asset-Backed Token

Let’s assume we have an “Abata marginal oil field” with verified reserves of 100 million barrels of oil. As we seek to raise funds from international investors for this oil field, we have proposed certain assumptions, including that promoters are restricted from selling crude oil for the first 5 years post-production and that all institutional investors must hold cold wallets on the Ethereum blockchain. Our Abata marginal oil field, with 100 million barrels of reserves, will implement a waterfall cash flow distribution for new investors and make direct payments to the engineering, procurement, and construction (EPC) contractor from investor contributions.

Key Assumptions for the Abata Oil Field Asset-Backed Token

•   Investors will buy asset-backed tokens representing their ownership in the “Abata marginal oil field”.

•   The GIAC smart contract format automatically distributes cash flows, as designed before investment triggers (e.g., revenue from eventual oil sales) evenly among investors in proportion.

•   The GIAC-formatted Smart Contract ensures that investor contributions are directly transferred to the project’s wallet, in which a waterfall distribution is encoded for payments of all service providers. Service providers include the EPC contractor and other oil services companies.

•   The EPC contractor’s wallet is credited directly from incoming investor funds, without interference from promoters and owners of the “Abata marginal oil field”, and other promoters. This ensures that EPC contractor is shielded from the payment risk sometimes associated with oil and gas contracts.

•   The GIAC-formatted smart contract enforces whitelisted investor wallets/addresses, and a lockup period is implemented automatically.

Key Features of “Abata marginal Oil field” Smart Contract format

•   Whitelisting: GIAC artificial intelligence programmes will enable only approved digital cold wallets to receive transferable tokens and cash flows.

•   Lockup Period: GIAC-formatted smart contracts implement artificial intelligence programmes that will permit only those asset-backed token transfers that are not restricted to receive early returns, whereas restricted tokens will be locked until the restriction time passes.

•   Dividend Payments: GIAC-formatted smart contracts implement artificial intelligence programmes that include protocols that can deposit tokens and cryptocurrency as dividends, which token holders can claim proportionally.

•   Ownership & Control: GIAC-formatted smart contract’s artificial intelligence programme facilitates administrative control for adding/removing whitelist members, locking tokens, and depositing dividends.

Fundraising for the Abata marginal oil field project

The operator of the Abata marginal oil field will issue digital tokens to pre-identified investors, working closely with the GIAC and its partners. The Abata marginal oil field asset-backed tokens will have been minted in line with the regulatory jurisdiction and standards of the proposed investment market. In Nigeria, SEC Nigeria’s regulations on digital and virtual assets will be observed. The digital tokens will subsequently represent ownership stakes in the oil field’s reserves. All investors who have purchased the digital tokens will deposit their funds directly into the designated Abata marginal oil field’s project digital wallet, in accordance with the instructions of the asset-backed token’s smart contract. This eliminates reliance on manual fundraising and distribution, which are traditionally used to receive and disburse proceeds from capital raises. This tokenisation process, enhanced by smart contracts, increases transparency and broadens access to global investors. International institutional investors prefer this approach.

Project Costs & Contractor Payments

As investment funds are aggregated in the project’s digital wallet, direct payments can be monitored as made to the project’s EPC Contractor. The EPC contract terms enable direct payments from investor contributions to the Abata marginal oil field’s project digital wallet, ensuring transparent, automated payments in accordance with predefined rules. This process is enhanced by the GIAC-formatted smart contract, which is tied to the asset-backed token. Observing this process ensures that the asset-backed token’s smart contract eliminates the need for payment intermediaries.

Revenue Sharing Post Project Development

The asset-backed token’s GIAC-formatted smart contract automatically calculates and distributes all revenue (cash flow) generated from eventual oil sales to preidentified digital wallets owned by token holders. This is done based on the token ownership share proportions. This proportional distribution is verifiable on the blockchain, increasing transparency and reducing, if not eliminating, disputes.

Ongoing Project Monitoring

The operator of the Abata marginal oil field will update the contract from time to time to reflect revenue from oil sales, thereby triggering the initial encoded distribution function. All transactions, including aggregated investments, cash flow distributions, and payments to the EPC contractor and service providers, are recorded on the blockchain, facilitating real-time internal and external audits, especially those required by industry watchdogs and financial regulators.

Enforcing Lockup & Regulatory Compliance

Asset-Backed Tokens in the oil industry will provide both financial and oil industry regulators with the most efficient mechanism to ensure, monitor, and enforce compliance. In this respect, for projects that require promoters to observe a lock-up period to prevent early selloffs, we program the token’s smart contract to enforce it. Restrictions can be applied and tied to specific milestones, allowing for transfers only when certain milestones are met. Artificial intelligence systems tied to smart contracts can trigger milestones by monitoring real-world situations. Regulatory compliance tied to smart contracts may even include whitelisting, in which only authorised, KYC-verified investors can participate in token sales and transfers.

Global Liquidity

The Abata marginal oil field tokens are integrated with compliant global exchanges, enabling secondary trading worldwide and providing liquidity, as well as unique exit options, for early investors. The most powerful contribution of the Tokenisation of real-world assets’ blockchain-based approach is that it enables “Abata marginal oil field” to engage with international investors, without the complex paperwork or local legal barriers.

Strategic Benefits of the Tokenisation of RWA approach in the Real World:

Transparency: Investors, Regulators, Auditors and all Stakeholders can review all transactions on the Abata marginal oil field in real time on-chain.

Lower Costs & Faster Transactions: Smart Contract-powered automations for payments, waterfall distributions, and even contract certificate payments, eliminating the need for intermediaries and reducing settlement times.

Global Investor Base: The entire Tokenisation process is a global platform that gives our simulated oil field promoters access to international investors, including retail and institutional investors.

Regulatory Compliance: Regulatory compliance standards can be achieved through whitelists and restrictive lockups that meet legal requirements.

Considerations for Nigeria  

Legal and Regulatory Compliance: Most high-level institutional investors in the oil industry are global, so whereas investments can be made in asset-backed tokens, tokenisation projects will undoubtedly need to adapt to Nigeria’s local laws under the Investment and Securities Act of 2025.

Technical Security: Strategic and technical capacity to conduct technical audits on smart contracts will be required as this approach continues to grow. This will define new roles for the technicians and software experts who have a strong understanding of what must be audited to prevent exploits.

Asset Valuation & Management: The role of Corporate Trustees is clearly defined in this simulated example with our “Abata marginal oil field”. It is pertinent to note that smart contracts’ contractual logic handles predefined financial flows but does not manage physical assets in the real world. In this case, a corporate trustee may be asked to step in to oversee the processes and procedures, ensuring that all parties act in good faith and conduct themselves as agreed in the tokenisation whitepaper.

Market Adoption: The advent of Asset-Backed Tokens as an investment class is still evolving globally. Their acceptance on global exchanges or through OTC markets still requires strategic partnerships and extensive engagement with traditional coalitions and institutional investment communities.

The Future: The asset-backed tokens and smart contracts collectively define the tokenisation project, and ensure that a digital, transparent, and automated system, which can now be used to raise funds for projects in the oil industry locally and internationally, as well as manage revenue sharing and ensure compliance, reducing costs and increasing trust.

Tokenised Gold by HSBC Hong Kong – A Real World Case Study

After extensive efforts to understand and position within this growing digital asset market ecosystem, and to implement its goal of expanding access to investors in Gold, in June 2024, HSBC, based in Hong Kong, launched its first Gold Token. This Gold asset-backed token represented and provided fractional ownership of real-world gold assets held in HSBC’s London vault. After the tokenisation process was completed, approved, and launched, each asset-backed token represented 0.001 troy ounces of gold. Retail Investors could buy these tokens on banking platforms, which effectively reduced the barrier to owning expensive gold ounces. By November 2024, the HSBC Gold Asset-Backed Tokens had attracted approximately 20,000 gold token holders from across the World, of whom a significant number were first-time gold investors—effectively making the case for the tokenisation of real-world assets. HSBC’s Gold Asset-Backed Tokens combined traditional real-world asset classes with cutting-edge 21st-century technology and a transparent digital asset market process. This offered retail and unsophisticated investors a secure, efficient, and accessible way to invest in gold for the first time.

Indeed……Great Things are Happening.

•Dr Nicky Okoye

Global Investment Advisor

Founder, Global Investment Advisory community