• The American fast food franchise company Fatburger has issued an Ethereum based security token as part of a funding round.
• For the first time ever, the rating giant DBRS Morningstar has rated a blockchain based security.

Fatburger, a fast food franchise company based in California, USA, has closed a financing round of 39.7 million. The special aspect of this is that Fatburger has issued securities on the Ethereum blockchain for this purpose, while DBRS Morningstar, the investment rating giant, has rated a blockchain based security for the first time ever.

The issuance of the securities tokens on the Ethereum blockchain was carried out by the consultancy firm Cadence from New York. According to the Forbes report, Cadence will record the transactions on the Ethereum blockchain and distribute them to investors. However, in a publication, DBRS Morningstar pointed out that the securities tokens are only “digital representations” of ownership and that the use of the blockchain “is only outside and parallel to the transaction and does not regulate the actual ownership of the banknotes”.

However, the blockchain plays a critical role in the actual investment process and distribution. In the issued press release DBRS Morningstar writes:

The structuring consultant intends to issue security tokens to all investors and record this transaction on the Ethereum blockchain. Any security tokens issued in this transaction will serve as digital representations of respective ownership in all four classes of Notes. This use of blockchain and distributed ledger technology will only occur outside of and parallel to this transaction and will not govern actual ownership of the Notes. The underlying documentation for this transaction will govern all aspects of the Notes and reference is made to the transaction documents for the terms and conditions thereof.

Forbes also reported that Cadence distributed the ERC20 tokens to investors’ Ethereum wallet addresses last Friday, with further payments to follow quarterly. The issuance includes three different ERC20 tokens, one of which is a Stablecoin linked to the US dollar.

As Forbes author Michael del Castillo writes, DBRS Morningstar mentions a “shorter forecasted performance period and greater transparency of token profitability” as a factor for a higher rating. Andrew Wiederhorn, president and chief executive officer of Fat Brands, Fatburger’s parent company, also told Forbes that his company has additional $500 million for projects in progress by the end of the year.

Anthony Pompliano, co-founder of Morgan Creek Digital, described the tokenization as a “big deal” and a small peak into the future of finance

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