All Luc Falempin wanted to do was buy a few shares of Google. It was 2011, he was still in school, and his plan was to start investing in the stock market with a thousand euros.

But when a broker told him that buying would set him back 150 euros in fees—plus "I don't know how much" to sell the shares—he scrapped that plan, Falempin told Decrypt.

After some googling, Falempin decided instead to put the money into bitcoin.

He came away from the experience with two bits of newfound knowledge: That something was "totally inefficient" about finance's status quo and that decentralized finance—then just in its infancy—was something to watch.

Armed with these realizations, Falempin would eventually develop "a vision when everybody will use blockchain for financial assets," since the technology brings "programmability and allow[s] everybody to share the same information," leading to more efficient markets.

This is the vision behind Tokeny Solutions, a Luxembourg-based startup Falempin co-founded, which helps clients issue blockchain-based securities—debt, equity or real estate, as the case may be—and enjoys the backing of one of Europe's oldest and largest stock exchange incumbents.

Before Tokeny, however, Falempin founded an e-commerce company, which was accepted to the Startup42 incubator in Paris. Sitting on the incubator's selection jury was Tokeny's eventual co-founder Daniel Coheur, who has decades of experience in traditional finance; Coheur invested in Falempin's project personally, and in his words, "followed Luc for almost seven years," at which point a French VC bought the startup.

"It was at that time that Luc approached me with the idea of creating Tokeny," said Coheur, now the company's chief commercial officer. The plan, he said, was to "leverage the expertise that [Falempin] grew for the last seven years in building those marketplaces, but to apply that to the blockchain."

The company began by helping clients issue tokens during the ICO boom of 2017.

And while the bust came sooner than the team might have expected, but that was just as well.

A focus on securities tokens

"We re-focused to this initial vision of tokenizing securities," Falempin said, adding, "we are now proud to say we have worked with many customers across equity, real estate, funds, and utility."

Tokeny's T-REX platform, built on the public Ethereum blockchain, hosts "permissioned tokens," which not only represent the security in question—a share of a company, a stake in a real estate project or a claim on some entity's debt, to name a few—but wrap it in a set of smart contracts that encode know-your-customer (KYC) and other compliance restrictions.

For example, there’s a whitelist of blockchain-based identities (not wallets, Falempin emphasized, an approach that doesn't cut it according to European rules). And with that, no non-compliant transfer of tokens is allowed by T-REX's on-chain validator system.

The system stands in sharp contrast, then, to legacy finance, which Falempin described as "still very analog and full of intermediaries. So it's totally inefficient."

"If everything is digital," he added, "you can automate the processes. It is programmable."

In addition to code-enforced compliance, this programmability may ease other headaches familiar to securities industry vets: "distributing dividends can be way easier," Falempin said, and "managing cap tables is automatic."

And through increased efficiency, Falempin argued, security tokens bring enhanced liquidity. Eventually.

"You have the promise of liquidity, which is not there yet," he said. But if Tokeny focuses on building efficiently transferable securities, he said, "step by step the liquidity will arrive."

Another intermediary or a new paradigm?

The question arises, as it so often does in the blockchain industry: Isn't Tokeny just another intermediary?

Not so, said Coheur and Falempin: Even if the company were to disappear, the T-REX system could still operate, and security tokens issued on Tokeny's platform could still change hands in a compliant way. "Tokeny is never a single point of failure," Coheur said.

The idea of issuing securities on the blockchain is having something of a moment: Asked who Tokeny's competitors were, Falempin named Polymath, Brickblock, Neufund, Blockstate and Securitize.

Despite the increasingly crowded landscape, however, Falempin and Coheur appear to have good reason to be optimistic about Tokeny's prospects. The company has already completed a notable issuance on behalf of Property Token S.A., a joint venture by two firms Falempin described as "key real estate players in the Grand Duchy in Luxembourg."

The issuance has "allowed a club of private investors to hold tokens that represent rights attached to a high-standing building located in the Grand Duchy," said Falempin.

A bit further afield, Tokeny is working with Neovate Systems, a property development firm based in Kuala Lumpur, Malaysia. Sam Helmy, Neovate's CEO, said his company has been working with Tokeny for a year on a security token offering (STO), in which tokens represent shares of a tower being built in Kuala Lumpur, as well as equity in a technology platform Neovate is building.

Tokeny has also attracted the attention of a major securities industry incumbent.

Euronext—which operates stock exchanges in Amsterdam, Brussels, Paris, Lisbon, Dublin and Oslo, and traces its origins back to the early 17th century—announced its €5 million investment in Tokeny, representing a 23.5% stake, in July. "Their whole tokenization strategy will be via Tokeny," said Falempin, "so we'll see how far we can go."

"This investment complements Euronext's position in the nascent digital asset industry," Euronext said in its announcement.

For Tokeny, the investment is about far more than the money: Euronext has thousands of customers dealing with bonds and equities, said Coheur, "so this is a market obviously that they are opening up to us in terms of introducing our solution and see how we can expand their offering to those companies."

Perhaps just as important, Coheur added, is "the derisking factor": prior to Euronext's investment, more than one bank has declined to entrust critical areas of the business to a two-year-old company.

"Basically," said Falempin, "they will open doors to Tokeny."