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What advantages do Art Security Tokens offer?
Rubey offers Art Security Token investors a dual opportunity: you get to invest in something that has a social impact and you get the chance to acquire financial rights based on the value of a piece of art.
With Rubey Art Security Tokens, you can help keep cultural heritage accessible and expand the collection of the Royal Museum of Fine Arts Antwerp (KMSKA).
Carnival de Binche by James Ensor has always been held in private collections until now. Thanks to Rubey and your investment, this piece of art is now on loan to the KMSKA for the full term of the tokenisation. So for the first time ever, the general public has the opportunity to admire this masterpiece.
Entry from 150 euros
You can participate in Rubey Art Security Tokens from 150 euros. This is unique. People seeking to invest in top-quality art usually have to dig far deeper into their pockets. Thanks to Art Security Tokens, the opportunity of a quality art investment finally goes hand in hand with a low entry price. The Rubey platform offers investments from 150 to 10,000 euros.
If you wish to invest a higher amount or if your company is interested in investing in Art Security Tokens, please contact us.
Note the quotation marks around ‘Co-owner’. This is because any investor who purchases Rubey Art Security Tokens effectively becomes the legal owner of these Art Security Tokens, even though they do not directly own the piece of art itself. The official ownership of the piece resides with a specific target company of Rubey. Each Rubey target company owns one piece of art and transfers the financial rights related to the piece to the token holders.
1 Art Security Token for Carnival de Binche by James Ensor = 1.41 euros
Carnival de Binche by James Ensor was divided into 1 million Art Security Tokens. The Art Security Tokens are subscribed to for a total price of 1.41 million euros. The issue price of 1 Art Security Token is therefore 1.41 euros.
The target company Rubey Paintco1 Sarl (the Issuer) uses the total amount of EUR 1.41 million raised with the Art Security Tokens to finance:
(i) the purchase of Carnival in Binche by James Ensor for EUR 1.2 million (excluding acquisition costs and taxes),
(ii) the costs and charges associated with the purchase, and
(iii) the costs of setting up the infrastructure for the issuance of the Art Security Tokens.
As an investor, you are entitled to claim a repayment on your investment from the Issuer at the end of the 10-year term (which may be extendable).
Please note: the amounts to be distributed by the Issuer are in all circumstances limited to the piece’s net realisable value, which is the value of the piece upon realisation after deduction of the costs of selling the piece. As an investor, your right of recourse against the Issuer is therefore limited to the piece’s net realisable value.
Scenario 1: the piece’s net realisable value is sufficiently high
If the piece’s net realisable value is sufficiently high, the Issuer will initially have to pay you your deposit of 1.41 euros for each Art Security Token plus a 0.5% annual interest rate. This 0.5% annual interest rate is based on the term the Art Security Tokens have been outstanding. The specific formula for calculating the interest is as follows:
The amount deposited for the initial purchase at issuance (1.41 euros per Art Security Token) is multiplied by:
The formula for the interest calculation is:
The amount deposited for the initial purchase at issuance is multiplied by:
(i) 0.5% annual interest
multiplied by:
(ii) The number of business days since the Art Security Tokens’ initial issuance
divided by:
(iii) 360 days
The interest is not paid out during the term and is not added to the outstanding amount of your investment deposit each year.
If the piece's net realisable value is insufficiently high, the repayment of the deposit (1.41 euros per Art Security Token) and interest will be limited to the available amount of net realisable value.
Scenario 2: the net realisable value of the piece is higher than in scenario 1
If the net realisable value of the piece exceeds the amount of the investors’ deposit plus the 0.5% annual interest rate, the investors are also entitled to claim their share of this capital gain. It means that as an investor, you are entitled to share fully in any increase in the piece’s value.
Scenario 3: the piece’s net realisable value is insufficiently high
In this scenario, the repayment of the deposit and interest will be limited to the available amount of net realisable value. This means that you risk losing some or all of your deposit
Finding an optimal time to sell
Of course, the Issuer aims to realise the highest possible value for the token holders. To maximise the chance of this happening and to limit the risk that the piece has to be realised in unfavourable market conditions, the Issuer can extend the Art Security Tokens’ term by 1 year up to three times. The term is therefore sometimes presented as 10+1+1+1 years. In the period of 36 months preceding the end of the initial 10-year term, the Issuer can accept a good offer for the artwork. In this case, the token holder will be paid before the end of the initial term. This allows the Issuer to decide on the best time to sell based on the advice from art experts and the current market conditions.
The payment on the Art Security Tokens will be made as soon as possible after the expiry of the term, and in any case within three (3) calendar months following the sale of the artwork. This way, all costs and taxes related to the sale can be calculated.
What is the potential return on your investment?
Scenario 1: the net realisation value of the painting is sufficiently high
Scenario 2: the net realisation value of the painting is higher than in scenario 1
Scenario 3: the net realisation value of the structure is insufficiently high
From 2023, the Issuer will give all investors the opportunity to offer the Art Security Tokens for sale on the 'bulletin board' the Issuer intends to provide on the Rubey platform.
You can therefore always (partially) leave the scheme during the term by offering the Art Security Tokens for sale on this 'bulletin board'. You will be able to put in a bid or offer for the purchase or sale of Art Security Tokens on this 'bulletin board’ as a buyer or seller. Other investors on the platform who are interested in the presented bid or offer can indicate this and request your contact information. This allows parties to get in touch with each other outside the platform.
It is important to remember that if the Art Security Tokens are sold before the end of the term, you must agree on a price for the Art Security Tokens yourself with an interested counterparty. There is no guarantee that anyone will be interested in buying or selling on the terms you prefer.
Since the 'bulletin board' will not be available on the Rubey platform until 2023 at the earliest, there will be no possibility to offer the Art Security Tokens for sale on the platform before 2023.
Additional commitments by Rubey.
The term Art Security Token contains the word 'security' for a reason. The Issuer considers the Art Security Tokens to be securities (financial instruments) and therefore wishes to comply fully with the applicable regulations.
The Issuer also enters into a number of additional commitments to the Art Security Tokens investors in order to protect their claims to the painting. This will make sure the token holders of Carnaval in Binche get the security they deserve.
Check out the additional commitments:
On 25 January 2022, the Issuer signed an agreement with the Antwerp Royal Museum of Fine Arts (KMSKA), which will be managing Carnaval in Binche to an excellent standard.
The piece also has the same level of insurance cover as all the other masterpieces at the KMSKA.
When the piece moves to another museum or exhibition, extra cover will be provided both for the transport and the other location.
Pursuant to a pledge agreement entered into on 28 January 2022, the token holders also have a security entitlement with regard to the Issuer based on a pledge on the piece of art. This gives the token holders a priority right with regard to the Carnaval de Binche painting’s realisable value over any other creditors.
As a ‘co-owner’, you wish to remain up-to-date on what is happening with your painting, of course. That speaks for itself. We will email you:
- Interim valuations of the piece by an independent art expert 5 and 7 years after the Art Security Tokens’ first issue and at the end of the 10-year term
- An interim condition report of the painting created by the experts of the Royal Museum of Fine Arts Antwerp (KMSKA)
- Notifications whenever the piece is going to an external exhibition or different museum.
The Royal Museum of Fine Arts Antwerp (KMSKA) is the only museum in Flanders with a scientific status. This gives token holders the assurance that the piece is in good hands.
No additional charges.
Rubey Art Security Tokens are not subject to any ongoing management fees.
What are the costs you do need to consider?
The Issuer does not charge any further management fees.
The Art Security Tokens’ issue price already includes the administrative and operational costs. This means that each token holder helps to maintain the tokenisation's administrative and operational structure throughout its life cycle.
The total value of the issue price of the Art Security Tokens for Carnaval de Binche by James Ensor is 1.41 million euros. The Issuer uses this amount to finance the purchase price of 1.2 million euros (excluding acquisition costs and taxes) and the estimated administrative and operational costs during the term of tokenisation, which total 210,000 euros. This amount covers all costs associated with this tokenisation project, including the costs of setting up the technical infrastructure, the legal fees and the valuation of the piece.
The Art Security Tokens are kept in a digital wallet of your choice. If you have a wallet, the Art Security Tokens will be placed in this wallet free of charge.
If you don't have a wallet yet, you can easily create one on the Rubey platform. This costs 15 euros/year.
Like some other investments, Art Security Tokens may be subject to taxes and levies.
Rubey does not provide tax advice in this regard. Depending on your country's regulatory framework, you may have to pay tax on capital gains from asset trading or on the value of your asset portfolio.
Rubey therefore strongly recommends you contact your personal tax advisor for more information about your personal tax circumstances.
Buying and selling Art Security Tokens.
Art Security Tokens are not just available to buy. You can also offer them for sale again yourself. First, the Issuer raises money in an Art Security Tokens Offering to finance the purchase price of the piece of art. Then, from 2023 at the earliest, Art Security Token investors can offer their tokens for sale themselves on the Rubey platform bulletin board. However, there is no guarantee that anyone will be interested in buying or selling according to your preferred terms. The liquidity of the Art Security Tokens may therefore be limited.
The initial Art Security Token Offering consists of two phases.
Phase 1: private sales
At the end of 2021, funds were raised within a limited group of private investors for a total amount of 1.41 million euros to be able to guarantee and close the purchase of the painting Carnaval de Binche.
The piece was then broken down into 1 million tokens. At that stage, the private investors own 100% of the Art Security Tokens. The issue price of 1 Art Security Token is 1.41 euros.
Phase 2: public sales
It is Rubey's mission to make art investments accessible to the general public. That is why the issuer buys back 25% of the Art Security Tokens to be sold publicly again at the exact same issue price of 1.41 euros. Anyone can enter from 150 euros until 25% of the Art Security Tokens have been sold. This public sales phase continues until the end of 2022.
From 2023, the Issuer will offer all investors – both initial private investors and investors in public sales – the chance to sell Art Security Tokens on the Rubey platform bulletin board.
Are there any risks?
Investing in Art Security Tokens is associated with several risks. Before you invest in Art Security Tokens, you should carefully read the following description of the associated risks.
The risk of the total or partial loss of your deposit and predefined interest rate.
The repayment of your investment and the payment of a possible return on the Art Security Tokens’ maturity date are entirely dependent on the evolution of Carnaval de Binche's value on the expiration date. If the value of the piece falls, investors run the risk of losing all or part of their Art Security Tokens deposit and of not receiving any interest or capital gain.
The risks are fully and extensively described in the terms & conditions and the information note when you register as an investor. Here we list some of them.
The repayment of your investment and the payment of a possible return on the Art Security Tokens’ maturity date are entirely dependent on the evolution of Carnaval de Binche's value on the expiration date. If the value of the piece falls, investors run the risk of losing all or part of their Art Security Tokens deposit and of not receiving any interest or capital gain.
There is a risk that the Art Security Tokens Issuer is not able to develop the Rubey platform as intended. The Issuer may not receive the regulatory approvals required to run the Rubey platform optimally.
Blockchain technology is a new, emerging technology. There is a risk that in the end the Issuer is not able to implement all the functions of the Art Security Tokens and/or the Rubey platform bulletin board as intended.
The Issuer offers no guarantees that a further public offering of Art Security Tokens can be made, the Rubey platform bulletin board can be successfully implemented and/or a liquid market for the Art Security Tokens will emerge.
Investors in Art Security Tokens must be prepared to hold on to their investment until the end of the term.
The legal framework of regulations that apply to blockchain technologies, cryptocurrencies, Security Tokens and Security Token Offerings (STOs), including the position of the various regulators, is evolving fast. It is therefore uncertain what the effects of additional regulations will be on the Art Security Tokens and/or Rubey platform.
There is currently no trading market for Art Security Tokens, and therefore no benchmark for the price of Art Security Tokens. If a trading market were to develop, the price of Art Security Tokens may be volatile.
Because an exact valuation of Art Security Tokens is difficult, the offer price may be determined arbitrarily based on the market conditions.
Investors should therefore not use the offer price as an indicator of the Art Security Tokens’ actual market value.
The Issuer relies on external contractors to design, develop and implement the Rubey platform and maintain the Rubey infrastructure.
If such external parties fail to meet their commitments to Rubey, this could obviously have a negative impact on the functionality of the Art Security Tokens and Rubey platform.
System failures or capacity constraints may also make it more difficult and/or impossible for the Issuer to operate.
The Issuer may not be able to prevent illegal activities on the Rubey platform. In extreme cases, this may result in disciplinary action against the Issuer, such as penalties or closure.
Blockchain assets and blockchain trading platforms remain susceptible to security breaches and cybercrime. The Art Security Tokens, Issuer or Rubey platform may become a target of cybersecurity breaches or theft.
Private keys allow the Issuer to unilaterally transfer or ‘freeze’ the Art Security Tokens in case of a security breach and/or cybercrime. However, even these security measures can be compromised.
The pledge on the piece of art may not be considered effective security if the piece is held in a jurisdiction outside Belgium and if a competing claim is exercised with regard to the piece in such a jurisdiction outside Belgium.
The Art Security Tokens tax situation is new and may change. Investors should therefore seek their own tax advice in connection with their investment in Art Security Tokens.
The tax authorities may disagree with certain tax positions regarding the Issuer, its operations and the Art Security Tokens. You may therefore be asked to revise the current positions in a way that may be disadvantageous to the token holders.
An Art Security Token is not an investment in a project that is listed on the stock exchange. This means that during the term, the painting can’t be valued based on the actual market price by a credit rating agency. The piece’s price evolution is therefore more difficult to determine. In year 5 and year 7 after the Art Security Tokens’ initial issuance, Rubey will have the piece valued by an independent expert and send the results to the token holders. The token holders will also receive such a valuation report at the end of the investment period.
As an Art Security Tokens investor, you run the risk of not being able to (fully) recover the amounts you are entitled to and of losing all or part of your invested capital and capital gains if the issuing institution goes bankrupt.