An experienced digital media professional, Andrew Dix is CEO and Co-Founder of the Crowded Media Group, publisher of Crowdfund Insider, the leading news and information site for the global Fintech industry.
Crowdfund Insider was recognized by Onalytica as a Digital Transformation Top 100 Influencer under the publication category for 2018.
Crowdfund Insider was founded in 2012, soon after the signing of the JOBS Act by President Obama. The digital publication has been a leading voice, and independent advocate, for the disruptive innovation of Fintech and access to capital for small and emerging companies.
Hi, this is Amy Wan. I'm here at the StartEngine Summit in LA, with Andrew Dix from Crowdfund Insider. Welcome Andrew.
How are you doing today Amy? It's good to see you.
I'm very good, how about yourself?
So, Crowdfund insider, the name of your online publication, purports to cover crowdfunding but, you actually cover FinTech more broadly and you now cover Blockchain, security tokens, all that kind of stuff. What made you make that shift?
So, in my opinion, crowdfunding was really the catalyst for FinTech to kind of get the ball rolling. Once people started to think, "Well wait a minute, I can do online capital formation, then I can do this, then I can do that," and so really, that was one of the flames that kind of lit the fire of the FinTech movement. Now with the advent of blockchain and digital securities and digital assets, I personally believe that that's going to meld well with online capital formation. You know, crowdfunding is a term, it's used differently around the world, but in the end it's internet finance or online capital formation, and it's all part of FinTech, and it's a very important part of FinTech.
You know, you follow all these security regulations quite closely, how people are trying to evolve them or amend them or propose new ones, what do you think about state of security token regulation today?
Well, it's evolving and I think that you're watching that process take place. Clearly the SEC has been slow to be vocal into how they want to regulate these securities. Now everybody kind of understands now that everything is a security, then the question is, is how they're going to regulate them and you're finally getting some clarity there. In the eyes of the SEC today, everything is a Reg D, Reg A+, Reg CF, you have to abide by existing security's laws. Now, there is a possibility that could change at some time down the road, but you don't any clarity of right that right now and that will really have to come from congress.
If you had one wish on something that you could change in the regulatory framework, what would that be?
That's an excellent question. The definition of an accredited investor is wrong. It is so antiquated and out of date, it's ridiculous, because what it does is it judges people based on the size of the bank account, not their sophistication, not their business acumen. Anybody that has the capacity and the knowledge to invest their own money should be able to invest in any security they want. I get it that it's an easy path to stop people from investing in highly risky securities, but if you look at someone who is a financial, a professor, at graduate school, he wouldn't qualify as an accredited investor. Most members of congress wouldn't qualify. A lot of people that work at the securities exchange commission, they wouldn't qualify, yet these are the people that have the knowledge that make them best qualified to make these decisions. The rule makes absolutely no sense, it just cuts out the vast majority of the people gaining access to investment opportunity.
You've often been a proponent of the idea of a regulatory sandbox for FinTech, can you quickly explain what a regulatory sandbox is and do you think we should have one for the security token industry?
Yeah, so that's an excellent question. The UK, the financial conduct authority, they were the first to do this and the idea was, is you would bring these innovative financial firms into the regulatory fold and let them experiment in a safe environment, that totally makes sense. At the same time, I think that the FCA was compelled to do this because they didn't know how to manage these FinTech firms. The best way to manage that is to have them come in and operate in your same house, and that way, you better understand, see and learn. So, really, it's multi-faceted. You have mutual information sharing from both sides. Everybody gains, makes sense, The United States should be doing that. The CFTC is doing it, and I give them kudos, I give the chairman Kudos. The SEC should be doing it now as well.
What do you think the security token industry needs to do to evolve the right way in 2019 and do you have any wish for how the industry will evolve in 2019?
So I actually think that the players that have emerged right now are doing a pretty good job, because you're having people engage in the space that have the wherewithal, the experience in the financial industry to make this stuff come together and make it happen. Yes, it's taking a lot of time. Innovation is sloppy, it can be messy, but I'm actually pretty optimistic about the direction we're heading right now, and I think once we see some of these Reg A+ offerings approved by the SEC, and once you start to see some of these trading platforms really come online, then you're going to see much more excitement momentum build. It's just going to take time. Yeah, I want to snap my fingers and it will all be done tomorrow, just like everybody else, but that's not reality.
You mentioned Reg A+ offerings, and there's a large stack of them for STOs' currently on the SEC table, and yet none have been qualified. Any comments about that?
Yeah, so everybody talks about that, everybody acknowledges it, and I think what it is, is just the SEC and FINRA, they're taking it slow, because they don't want to mess up, and I understand that, I wouldn't want to mess it up either. But I think it's going to happen. I think within the next few months, we're going to see a Reg A+ issuer approved that will issue a token. It's just going to happen. It's just a question of time. There's too much momentum behind it; there's too much interest behind it, and I think that it's going to be soon.
Interesting, and what do you think about the current hype around regulatory arbitrage, all these start-ups looking offshore to other jurisdictions who have made their regulatory environments a lot more accommodating? Malta Singapore for example.
So, I respect these smaller jurisdictions that want to compete with the big guys, I'm like, "Go for it." I mean that's how we operate. So it's all about competition within the marketplace. But I do think that over time, the larger markets, once they get established, it'll probably take some wind out of the sails. You already have France that is working on bespoke legislation, the pack law, which is expected to go into effect in early 2019. That is supposed to legalize ICO's, and then you have the US. Sure we have a go slow mentality here, but we also have a couple other things that are really important. We have a profound amount of risk capital, there's lots of money here, and we have rule of law. And when you have rule of law, that counts. You have a big market, you have lots of money and I think in the long run, The United States can be well positioned. That isn't saying that they shouldn't be aware of what's going on around the world, they very much so, because they can get lapped, but that's where I think today.
Fantastic, thank you so much for joining us Andrew.
Thank you Amy.
This Amy Wan from StartEngine Summit.
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