USP launched March 1, 2023 to accredited U.S. investors. Offerings of USP security tokens are made possible through Regulation D Rule 506(c) for U.S. accredited investors, and through Regulation S for non-U.S. investors. At launch, 1 USP will be worth $1.
USP is funded and sponsored by Primior, a leading real estate investment, development, and management firm in Southern California. Unlike other blockchain projects, USP is a “real estate native” that already owns and manages profitable assets to securitize.
With over $2 billion in successfully managed real estate portfolios, Primior’s proven business model will now be implemented on the blockchain!
Passive income such as rent and property value appreciation (to the extent realized) would be reflected in the value of the USP token.
With the tokens representing ownership shares, holders can expect to receive quarterly reports along with their passive income from rental properties, which would directly impact the overall value of the USP tokens.
In general, if an investor receives a security token as part of an offering, they may need to report the fair market value of the token as income and pay taxes on that amount.
If the investor later sells the security token at a profit, they may need to pay capital gains tax on the difference between the sale price and the purchase price. The capital gains tax rate will depend on their holding period and the tax laws of the relevant jurisdiction.
It is important for investors to consult with a qualified tax professional to determine their individual tax obligations related to security tokens. The tax treatment of security tokens is a complex and evolving area, and investors should seek guidance to ensure compliance with applicable laws and regulations.
A lockup period is a type of requirement that some security tokens need to comply with federal regulations. During this time, investors are not allowed to trade or transfer their tokens until after the lockup period ends.
For U.S. accredited investors, the lockup period for selling to other U.S. accredited investors is 90 days. Both parties must have a USP Investor Portal account, and should have completed onboarding – including KYC and Accredited Investor verification.
For non-U.S. citizens who have purchased USP under Regulation S, which allows for non-U.S. citizens to buy USP without being an accredited investor, you have no lockup period if selling to foreign investors. Both parties must have a USP Investor Portal account, and should have completed onboarding, including KYC verification.
If you are a non-U.S. citizen looking to sell your USP to a U.S. accredited investor, you have a lockup period of 12 months.
After the initial raise, the company would only mint new USP tokens in one scenario: a capital raise.
These tokens would be minted at the current book value per share at the time of the new offering. By minting new tokens at the same book value as existing tokens, the value and fractional ownership of existing tokens remain unaffected, allowing new investors to participate in USP without diluting the value of existing tokens or negatively affecting their returns.
Furthermore, this structure provides transparency, which helps maintain the steady growth of the tokens’ value, both at book value and market value. This transparency is important to ensure investor confidence and trust in the long-term performance as a store of value and medium of exchange.
While Primior is committed to ensuring that USP offers the necessary transparency and reporting regimen to be fully compliant, the token structure of USP in its maturity phase may also be influenced by the decentralized autonomous organization (DAO) [see page 25 of our Whitepaper]. By empowering the community with a DAO, USP can adapt and evolve over time to meet the changing needs of the digital environment.
A security token represents an investment contract in an underlying investment asset that exists on the blockchain. Whereas security tokens require the same reporting and compliance measures as digital securities, the transactions are automated through an institutional-grade blockchain specifically designed to operate under existing regulatory frameworks.
The key differences between a security token and a cryptocurrency are that a security token represents ownership in an underlying asset, is subject to regulatory oversight, and is typically backed by a tangible asset or revenue stream; whereas, a cryptocurrency is a digital asset designed to function as a medium of exchange, operates on a decentralized network, and is not backed by any physical asset or revenue stream.
While both tokens utilize blockchain technology, security tokens are designed to represent financial securities and are subject to government regulation. In contrast, NFTs are typically used to represent unique digital assets that may not have a financial component.
Like stocks, bonds, and REITs, security tokens are digital shares of a corporation; however, they exist on the blockchain, and thus all tokens of the same type must have the same value, making them interchangeable and fungible.
Whereas NFTs can offer fractional representation of an underlying asset, they are usually not subject to securities regulations and their value is usually based on scarcity and demand from collectors or fans.
Primior currently owns other commercial real estate assets with which to securitize USP. Additional proceeds from the sales would be used to fund acquisitions and upgrades to enhance the current assets, but, unlike with other projects, there is already enough asset value on hand to fully collateralize the raise.
USP has no plans to acquire properties outside the United States as of right now; the strategic acquisition and management of underlying assets is crucial for a real estate-backed security token to function as a superior store of value and medium of exchange.
USP’s mission is to create a highly liquid asset backed by real estate value for stability and reliability. While there are emerging real-estate markets with growth potential worldwide, none offer the same level of security and stability as those in the United States.
USP implements a conservative investment approach, including ensuring that financing and leveraging are under control. Since USP represents common shares in a corporation, token holders are also shareholders who have the same legal rights as stock investors.
If an investor suffers a loss due to a violation of securities laws or other legal obligations related to their security token investment, they may seek legal recourse through the relevant regulatory authority or agency as well as pursue legal action through the court system.
It is recommended that investors consult with a qualified attorney with experience in securities law to discuss their options and potential courses of action.
Can the value of USP tokens increase if the underlying assets have not also increased in value within the same time frame?
The market value and the book value of a security are not tied or pegged together. While the actual book value often influences the price of the security, the market value is also determined by additional factors such as, supply, demand, growth potential, stability, and more.
It is not uncommon for the market value of a security to be higher (or in some cases, lower) than the book value of a corporation.
Similar to traditional securities, security tokens can be fractionalized based on the NAV or book value of a corporation, but the value is not necessarily pegged to that figure. Instead, the value is secured or stored in the underlying assets – making the security token holder a fractional owner of the corporation holding those assets.
USP, like other investment vehicles, is not claiming to be 100% liquid with an instant exchange rate.
USP will have an initial maximum supply of 1,000,000,000 tokens. The distribution and lock-up periods are as follows:
After the initial distribution phase, USP would be governed by a decentralized autonomous organization (DAO). Rules would be enforced automatically via code embedded in the digital assets themselves and controlled by a consensus of the holders.
While the current management team is inclined to focus on the value proposition and retain subject matter experts to develop the token, they are aware of the importance of selecting a consensus algorithm.
Therefore, the DAO will have the ability to vote and elect new management that can ultimately influence USP’s investment strategy.
How do you plan on convincing investors to come in on a long-term project like this rather than chase the next 'guaranteed 100x' memecoin?
An individual’s goals and risk tolerance are often crucial factors in making any investment decision. For those seeking a stable and secure investment option with the potential for steady long-term growth, a tokenized real estate portfolio could be a suitable addition to their investment strategies.
While a security token backed by real estate won’t provide the possibility of “getting rich overnight,” it offers a more secure and stable investment option with the potential for steady growth over the long-term.
In addition, by using the stable returns from a real-estate-backed security token to fund speculative investments in meme coins, investors can potentially build wealth while still keeping their investment secure. This balanced approach to investing helps protect against the volatility of the cryptocurrency market and mitigate risk.
The information provided in this response is for educational purposes only, and should not be construed as investment advice. Investing in securities involves risk, so investors should carefully consider their investment objectives and risks before investing.
It is often believed that foreign investors do not have legal recourse available under the SEC’s Regulation S. However, this is simply not the case.
If USP were to go down, the creditors would come after us. The company would be liquidated, and the shareholders would be compensated.
Want to learn more about USP? Check out the links below for more information about our project roadmap, frequently asked questions, and how to get involved.