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Lou Kerner

Founding Partner of CryptoOracle

Lou Kerner is a Founding Partner of CryptoOracle, a Crypto VC and Advisory firm focused exclusively on investing and advising entities leveraging, blockchain, cryptocurrency, smart contracts and decentralization. CryptoOracle Co-Host’s BlockFin, the largest Crypto Focused FinTech Conference in the world. Lou has been a Crypto enthusiast, investor, public speaker and thought leader since 2013, when the Wall Street Journal called Lou “Wall Sreet’s Bitcoin Expert”. Lou regularly hosts conference calls and Meetups with Crypto industry innovators attended by hundreds of Crypto enthusiasts and investors from around the world. Lou is currently ranked among the Top 5 most influential Crypto bloggers on Medium, regularly keynotes major Crypto industry events, and often appears on TV or in print talking about Crypto.

Prior to CryptoOracle, Lou was a Partner at the decentralized VC, Flight, where he managed The Israel Founders Syndicate. Prior to Flight, Lou was the Managing Partner of The Social Internet Fund (SIF), which invested in shares of rapidly growing tech companies. Prior to SIF, Lou was an angel investor, best known for investing in Facebook and writing the first Wall Street style research report on the company in 2010. Before angel investing, Lou ran two digital companies, Bolt (the largest social network before MySpace), and .tv, which commercialized the top-level domain (.tv) licensed from the tiny island nation of Tuvalu. .tv was acquired by Verisign. Prior to .tv, Lou had a distinguished career as an equity analyst following media and tech companies for Goldman Sachs and Merrill Lynch.

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Chris Housser

Co-founder and COO, Polymath Network

Chris Housser is the co-founder of Polymath. He is a former litigation lawyer and Afghanistan veteran.

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Daniel Coheur

Co-founder and CSO of Tokeny

Daniel is the co-founder and CSO of Tokeny. In this role he can lever the experience of his corporate background, which cantered around global growth of transactional based enterprises. In banking (Clearstream Banking owned by Deutsche Boerse), and telecommunication (Syniverse owned by The Carlyle Group). He is a genuine entrepreneur who mentored and funded several start-ups before creating his own investment boutique. Daniel is also an adviser for StartUp42, a non-profit startup accelerator part of the EPITA, the Paris based Graduate School of Computer Engineering. He holds an MSc. of Economics and Business Administration from HEC Liege (Belgium) and from the University of Valladolid (Spain). He resides in Luxembourg and is married with four children.

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Tokeny The Luxembourg based fintech is dedicated to providing an institutional grade, secure end-to-end platform, supporting the sale and management of tokens during and after an STO. Tokeny is able to bring to its clients the experience of being the first European platform delivering live projects, including $250m of Property, and €50m of Equities.

The Tokeny platform allows a company to focus on its business concept, marketing, and all the other aspects of an STO without needing to be concerned with any of the technical challenges.

Tokeny solutions handle high volumes of contributors simultaneously, while also managing bank grade KYC & AML compliance, as well as a fully featured contributors’ portal and well tested smart contracts.

The international team behind Tokeny brings skills from the traditional securities world, as well as blockchain, and decades of experience in delivering mission critical global technology solutions.

 

Jamie Finn

President and Co-Founder of Securitize

Jamie Finn is the President and co-founder of Securitize Inc., one of the fastest growing companies in issuing security tokens. During his nearly 20-year career, he has worked in six countries with startups and corporations and participated in more than $750m worth of transactions including Kontera, Sansa Security, Jajah, Tokbox, RingRing Media and Zingy.

Before co-founding Securitize, Jamie helped grow Aki Technologies from $1m in revenue and eight staffers to one with more than 60 people and tens of millions in revenue. Prior to that, he held executive roles at Ericsson, Telefònica o2, and AT&T.

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Securitize An end-to-end platform for issuers that are seeking to tokenize assets

 

Timo Lehes

Co-founder & CIO of Swarm

Timo has over 20 years of experience from starting, running, exiting and investing in software companies. Throughout his career, Timo has invested in more than 40 companies. With a specific focus on Fintech, he has contributed to the creation of several alternative investment platforms. He currently serves as a board member at BankerBay, the world’s largest deal origination platform for mid-market Private Equity deals. He holds degrees in engineering and business administration from Chalmers University of Technology and early stage investing from continuing studies at Stanford School of Business.

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Transcript


 

Lou Kerner:

Really quick, my name is Lou Kerner; I’m the CEO partner at Crypto Oracle. We are a community first VC accelerator and incubator. And if any of you are in New York, we run something called crypto comments, which is a crypto shared workspace and if you’re in Berlin, that’s where the second one is opening up, and so that’s who I am. Let’s guys … I’ll let each of you introduce yourselves.

Chris Houser:

Chris Houser, Co-founder and COO of polymath. It’s a decentralized application on the Ethereum Blockchain that allows people to create security tokens in an easy and compliant manner. We don’t do the legal for those folks, but what our platform does is it allows people to trade tokens where trades and transfers of the tokens are restricted to only authorized and white list of addresses.

Daniel Glare:

So I’m Daniel Glare. I’m a co-founder and responsible for strategy at Token. I guess we do pretty much the same thing, right? So, we have a tokenization platform, we take care of the issuance on primary markets and for security token and utility token as well, and then we take your managing the life cycle of the token after the issuance as well as permission token on secondary trading.

Jamie Finn:

Cool, I’m Jamie Finn, co-founder of Securitize and we do primary instruments like most people. We pride ourselves on our compliance protocol, which is called the Digital Security Protocol.

Timo Lehes:

Yes. Timo Lehes, co-founder of Swarm and we are a marketing infrastructure for security tokens and it’s, basically, a decentralized network of nodes that operate a security token Blockchain and the compliance layer that we have built on top of the Blockchain.

Lou Kerner:

Okay, terrific. Timo, I’ll start with you and if everybody can answer just to help put the rest of the conversation in context, and we’re here talking about the tokenization platforms. Where are we in terms of the ability, actually, of these platforms to actually issue these tokens and for the tokens to trade?

Timo Lehes:

Yes. So we’re in a very good place because 12 months ago, when we started talking about security tokens, nobody would listen. So now today when you talk about security tokens, it’s a very popular topic. So it’s much better now than 12 months ago. That’s one part of the answer. I think the second part is that, we distinguish very clearly between, let’s say, asset back tokens, security tokens and, let’s say, ICO security tokens.

So we started out with tokenizing LP positions in funds and bringing, basically, hedge funds, private equity funds, and real estate funds to the masses. And so that was our first, let’s say, focus with Swarm. The reason why we did that was because we didn’t want to have all the ICO noise brought onto our platform or network. So, I’ve done over 40 tech investments in the past, I know what the numbers look like from a stats point of view. So we bought …

Lou Kerner:

Any of those security tokens?

Timo Lehes:

No. So the point being …

Lou Kerner:

So where are we?

Chris Houser:

So you don’t own these security tokens.

Timo Lehes:

So, here’s the thing. If you bring on really good assets and you tokenize those assets, high quality assets, we think that’s a good place to start and that’s where we started. So we’re early days but there are some really good things out there that you can buy with security tokens.

Lou Kerner:

Okay. Jamie, I know it feels good.

Jamie Finn:

Yes, I mean, I do. I’m the CEO … I was a seed investor in Spicy Seeds, so I’ve got a very significant amount of spices tokens in my wallet and actually today we just started the issue with that.

Timo Lehes:

I mean, just tell the story because it’s interesting. Right? I mean that’s the white security type…

Jamie Finn:

Yes. I mean, we basically needed a platform and Carlos came to me and he was like, “Hey, we need to build this thing, can you … do you want to invest?” And I was looking at the space and I’m kind of a neandethal investor, right? Like the ICO thing didn’t make a ton of sense to me, I wasn’t buying anything. I don’t need to buy the future use of something that didn’t make sense to me. I wanted something that would make money for me and so investing in a VC fund, which I couldn’t do myself, was really interesting.

And so that’s how it came together and I think … the fact … Every time I log in to the dashboard and I see my tokens or I can even see them on my tracer, they’re sitting there and I can do what I want with them. Trading is about to start, so it’s going to be really interesting. Earlier today we started the second issue is now have 22X. 22X fund, right now, is being delivered to everyone’s wallets. It’s going to take a good 18 to 24 hours to do because it’s not the fastest environment, but when running these issuances you see the real problems and so it’s fascinating right now.

Lou Kerner:

And so again, in terms of where we are, so you’re saying we can … you’re actually out there issuing tokens on the trading site.

Jamie Finn:

Yes, we’ve completed integration now with open finance, been working with a couple of other decentralized and centralized exchanges around integrating the compliance protocol, and so, as we do that, we’re learning all the time. We’re learning about a lot of the guys were talking about earlier and implementing those kinds of controls. I think we’ll see … And I definitely think we’ll see this month trading start at a very, very micro level. It’s going to only be a few tokens, B-Cap, spice, 22X, because there’s a lot of that stuff that was issued under REG-S. So I think that trading will start, but it’s going to be super thin. Right? So if everybody’s out there, go trade these.

Lou Kerner:

What’s this ... So you mentioned second issue which 22X.

Jamie Finn:

Yes.

Lou Kerner:

A great concept out of there, they aggregated a bunch of companies out of a startup 500 batch you know… I know are really great companies. How much was raised from that?

Jamie Finn:

I think the net of it; we’ll see it’s going to only be a few million dollars. It’s not going to ... the aspirational is very big. The net of it, the companies wind up getting 75 grand a pop or something, so it’s very small. It was a very aspirational project. I think we learned a lot and they’re going to go out and raise some because the equity is still there so it can still be bought at a pretty serious discount.

Lou Kerner:

And what was the primary lesson learned?

Jamie Finn:

When you … Having a venture partner run the fundraiser is a really good idea. When you have folks who haven’t done fundraising before, it doesn’t really work out that well.

Lou Kerner:

Note to self.

Jamie Finn:

Yes, note to self.

Lou Kerner:

That seems like good advice. Daniel.

Daniel Glare:

So, I guess I’m the only member of the panel that is not based in the US, so I’ll give you a different perspective. So we’re based in Luxembourg. We started operation in March last year. In the meantime, we’ve been launching our tokenization platform with utility tokens, so we run 12 ICOs, raised sorry, $50 million for those project and performed 60,000 KYCs. Now we’re moving to security token which is, obviously, an extension of what we did with utility tokens. It’s the same transaction platform but security token are more complex because they have a life after the issuance and they don’t feed an ecosystem.

So we need to develop the proper tool for investors and issuers to manage those tokens and then bring them to secondary trading. You asked me where we stand. I think there is something that we are observing here. It’s for utility token there is was big vibe, I believe that was $8 Billion was invested in utility token. I see that very much like people going to the casino and they came with €100 and then they ended up having €10,000. Right? So what would you do? One, you’ll probably going to take €2,000 out of that and continue gambling.

Timo Lehes:

No, I’ll probably go to the bar.

Daniel Glare:

Yes. Well, and you’ll be with me probably. But what happens is that, there was a massive amount of money that was flooding into ICO because those people that wanted to gamble those $2,000 probably with the expectation they would make $20 million continued gambling and I think now that those people probably dump all the money and now the market is drying. So what we need to focus on now is how do we convince the people that do not have those coins to invest Fiat currency into this project? And that’s where we are now. It’s not about focusing on people that had crypto and became rich out of that but how do we bring people with real money into this business?

Lou Kerner:

Are you originally from Luxembourg?

Daniel Glare:

I’m Belgium actually.

Lou Kerner:

And so, did you move to Luxembourg to do this?

Daniel Glare:

Well, I’ve been living for 25 years in Luxembourg. I hate paying taxes. So …

Timo Lehes:

Stop bragging.

Lou Kerner:

Chris.

Chris Houser:

So where are we now? I’d say 2016, 2017 were the years of the ICO and the Utility Tokens. We started polymath in the spring of 2017 and we thought that 2018 would be the year of a STOs and security tokens. It’s taken a bit longer than that, both from a development standpoint and regulatory standpoint. We launched our platform in January of this year; however, if you didn’t know how to code on the Blockchain, it was basically you weren’t able to use it. In August we put out a, basically, a point and click application layer and now people are able to go onto polymath, they can create a security token, they can consult with legal and they can go about raising money for their security token.

So we’re waiting for that first batch of issuers to go through the platform and start to raise money using our system and other similar systems in the Blockchain to really bring the security token movement to full fruition.

Lou Kerner:

Have you learned anything yet from the pointing and clicking that’s going on the platform?

Chris Houser:

Yes. So, I mean, for me having gone through it many times it’s easy to use, but as new people are coming in and trying to use it, there’s endless questions. It’s usable in any jurisdiction as well, but there’s different regulations in each specific jurisdictions. So they’ll ask questions and if our framework or standard doesn’t adhere to over in Singapore or somewhere in Europe, we’re constantly making iterations so that the framework can be used worldwide in a not point and click, but consult with legal and change the variables as they need be to create a token that’s compliant within their jurisdiction and the jurisdictions of all the investors that they seek to raise funds from.

Lou Kerner:

And have you learned anything in just terms of the jurisdiction? Are you surprised on where people were from that were going in and using the platform? Have you seen any particular country standing out that surprising or missing?

Chris Houser:

I think, especially from a marketing standpoint, which is … for us people think Polymath’s only usable in Canada and the United States, really it’s usable everywhere. We’ve consulted with people in Singapore, in Hong Kong, South America. There’s been a number of interested parties and it’s just about getting the messaging out that, really, this framework is usable everywhere and let’s talk to your regulators. And that’s part of our mission too, it’s going forward to speak with the SEC, to speak with regulators in Canadian provinces and worldwide just to educate them and learn from them what we can do better.

Lou Kerner:

Cool. And Jamie and Daniel, you’ve done a number of these. You’re saying … Actually you said you’re going to do a second graders?

Jamie Finn:

Yes.

Lou Kerner:

Second issuance for 22X. What are you doing differently now than you were awhile back?

Jamie Finn:

Basically bringing on professional fundraiser that knows how to do these things and it’s not me, it’s the fund that’s doing it, right? I think …

Lou Kerner:

So what? Did the 22X hire somebody internally to the team who’s not part of the team?

Jamie Finn:

Yes, somebody who was already involved just taking a much more senior role, very experienced person, in the space and pushing that up. But the other thing here to remember is, this isn’t … In many of these cases, like a venture fund, it’s not the same as a standard ICO where they need a huge amount of capital to even be functional. These things can go out with much smaller amounts of capital and continue to close. I think spice is also going to go out and do another set.

So you can go out and continue to raise capital around these things as they’re out in the market and trading. So I think that’s going to be like managing liquidity and investor relations or things that people are not thinking about and they should really need to start thinking about because these are fundamental issues.

Lou Kerner:

Yes, I mean it’s hard to get ... You’re totally right, the part to think about that until you actually … it seems so hard to raise the money just to begin with today.

Jamie Finn:

Yes, capital formation is absolutely the biggest challenge. I would say the bulk of the investors we see are not American in the deals we have. We see a lot of foreign investors because they’re earlier in the ... they’re further on in the crypto cycle and they understand a little bit better. American investors are minimal. I think spice has three and I know two of them personally.

Lou Kerner:

Right. Again, I’ll ask you the same question on Chris, you know are there any particular countries that you see standing up or are more active on your platform, Jamie?

Jamie Finn:

Me?

Lou Kerner:

Yes.

Jamie Finn:

Yes. I mean we’ve … I was shocked to see Nigeria, a lot of real investors showing up with real amounts of money from Nigeria.

Lou Kerner:

A lot of princes there, right?

Jamie Finn:

A lot of princes but it blows your way, like even being able to do KYC on them and figure out the information is fascinating, that all that infrastructure is there. And it was really surprising to me when I saw that kind of all start to happen, and you have to look at the founders of the group. Like the 22X one has a couple of African startups and so they were able to raise capital there. That’s an amazing thing if you think about it and that entire continent is there and growing tremendously quickly, and so the opportunity that could happen will be really interesting.

Lou Kerner:

And so you said your average tech…with success for 22X was 75,000?

Jamie Finn:

That was to the opted companies. But the average investment, yes, about $10,000 I think you’d say.

Lou Kerner:

And that’s the team obviously dramatically different from … with the plan is on your platform?

Timo Lehes:

Yes. I think just talking about the international aspect of this and just reflecting on the previous panel, it’s so US centric. It’s almost ridiculous. Right? So when we first launched in January, we had users from over 50 countries in five days. So we didn’t … you don’t know that. When you’re running your community on Telegram you have no idea what people are coming from and then all of a sudden they show up and they register and provide KYC and then you have people from 50 countries, and now we’d have 60 plus something.

So that’s the reality and some of these countries would be, I don’t know, somewhat surprising. I guess like we have a big user base in Vietnam. Why? Vietnam has 35% inflation per year. They want to buy something that’s a stable asset or something that’s interesting to them that’s outside of their own fiat currency. It makes sense. Right? So, and also obviously these are early crypto adopters, so they would only know about Swarm if they were in the crypto space from the beginning. So that’s, kind of, slicing the demographic in a different dimension so to speak.

Lou Kerner:

And Daniel, what are you seeing from users on your platform?

Daniel Glare:

Well, I think that the users are coming from the market where you’re targeting. There are so many a marketing company in this industry that if you want to work with one that is focusing in Vietnam because this is where the best relationship, you’re going to get investors from Vietnam. If you’re targeting the Nigerian market, you’re going to get investor from Nigeria. How the hell would they know about your product if they know they don’t hear about it, right?

Chris Houser:

Yes, discovery is a fundamental issue.

Daniel Glare:

So, I think that if you want to focus on a market, you just put your marketing dollar into that market and get investors from that market. And then of course, if you focus on the wrong markets, you’re going to have a lot of people that will make your platform basically explode with a lot of KYC that ended up being dropped in the middle of the process. That’s something that you want to see you, right? So, I think the fundamental of this business is about creating visibility. So you have to pick up a good marketing company that will deliver you the visibility you want and the type of investor you want.

Lou Kerner:

And so, given the importance of discoverability which makes a lot of sense, are you doing anything to help the companies drive that for themselves?

Jamie Finn:

Well, actually, we are really defining ourselves as a technology company. I think that in the early days of ICOs, people were not very familiar with ICO, so they wanted to have a one stop shop and everybody was capable of doing everything, which is completely wrong, of course. So we decided, from the beginning to focus on the technology and bring a network of partners that would complement what we do.

If we are not an expert in the installation in Malta, we work with firms that have that expertise. We’re not experts with legislation in the U.S, we have a network of partner that does that and we being the technology part, I think that focusing on the technology is essential because you want discoverability, you want a security and also you need to have a roadmap that will meet the market’s speed and that’s really not easy. So focus on what you are good at.

Lou Kerner:

And Chris, how do you think about discoverability and helping companies on your platform to reach their audience?

Chris Houser:

I think a lot of companies and aspiring issuing issuers have seen the success. And I say success in terms of the amount of money raised for a lot of these ICOs and think that they can go about and do a security token offering, and also raise $50 million or $100 million, whatever the number may be and I’m not quite sure if the investors are ready to put that type of money into these securities. When you look at the ICO space, everyone was expecting overnight a 1000% return or 10X in a year whereas securities there’s no reason, if you tokenize a building or sell equity in your company, that it should go up in the same way that ICOs went up.

So I think that message and defining who those investors are is really important to the issuers. It’s not necessarily the crypto rich people that have traditionally invested in bitcoin, Ethereum and the ICO space that they need to communicate with. It’s educating the traditional investors into the Blockchain space and into crypto, and teaching them about how now they can hold their own assets, they can hold the securities and hopefully there’ll be added liquidity for a lot of these private offerings that don’t currently have much liquidity.

Lou Kerner:

So liquidity, Jamie you talked about that and then obviously you’re right. Most people, they’re so focused on trying to raise the money, thinking about now that they’ve actually done an ICO … if you’re tradable, that’s great, but if there’s nobody to buy, it doesn’t matter that you’re tradable. So how do you think about and you know, it’s kind of discover…obvioulsy part of this discoverability after the initial offering, but how are you thinking about liquidity and helping your clients thinking about liquidity?

Jamie Finn:

Well, I mean, at this point we’re exploring conversations with all the normal liquidity providers and trying to really understand the dynamics of that market. We’re not in any way to perform experts in financial markets in that way and so there’s a ton of education and that’s where we’re spending our time. It’s really … These kind of edges, they’re super important but they’re not core to our product, but they’re super important for our customers.

Lou Kerner:

And is there anybody that you see who’s provided liquidity or that you think actually these guys are doing a great job who bring liquidity to the market or we’re not there yet?

Jamie Finn:

We have customers that have been very successful at raising very large sums of money and they’ll go out, and I believe that those types of offerings will have liquidity. There’ll be brand name things that people understand. I think a brand name in this space will help a lot, a few things that people recognize and want to buy, I think will really help move the market forward. That’s when, I think, we’ll start to understand what it all means.

Lou Kerner:

Are there any brand new coming down the pipe you’re aware of? They’ve got this …

Jamie Finn:

Yeah, I mean I’ve seen … I think I’ve heard about a bunch of real estate, like very high end real estate deals coming out. We’ve seen the 10th Lems Aspen coin that’s at St. Regis fantastic property. So, it’s starting to happen and recognizable things are starting to happen, and I’m pretty sure we’re going to see a bunch more of those in the next few weeks.

Lou Kerner:

Timo, how does it work, the liquidity from the fun side?

Timo Lehes:

Well, I mean I think, the big thing here is that we’re now involved in two projects that’s basically tokenizing existing assets. It has nothing to do with raising capital, has everything to do with providing the ability for people to buy into premium assets. And one is secondary and one of the very large high tech companies from China, and the second one is a nine digit real estate portfolio. So when I look at this …

Lou Kerner:

What kind of portfolio?

Timo Lehes:

A real estate.

Lou Kerner:

Real estate?

Timo Lehes:

Yes. So when I look at this, it’s like the bigger numbers are coming from that side. Like when you take a large asset, 100 million plus, and you start providing liquidity through something like a Blockchain infrastructure, that’s when the big numbers come in. If you take an ICO startup and then bringing it onto the Blockchain and try to create your security, it’s not … it’s going to be minuscule compared to what you can do with tokenizing large assets. So that’s where I see the big shift.

And also just answer the question about liquidity. When you have those assets on your chain, well that’s when the real money rolls in there. So there’s a bunch of family offices that we’re now having dialogues about it. So, we, kind of, shortcut it from the day one so we know there’s going to be liquidity for that asset immediately when it’s brought onto the chain.

Lou Kerner:

And are you seeing on the family side, are they … what are they doing in terms of … are they taking actually … going to take the tokens themselves and hold it in a wallet or are you providing and helping them find custodians for that?

Timo Lehes:

Yeah, 9% … 99% are not going to hold them themselves. They don’t know how to do it basically.

Lou Kerner:

Sure, and so who’s going to hold it for them?

Timo Lehes:

A partner? So basically we have… we haven’t announced yet but we have two different partners that handle either Fiat-Crypto, custodian solutions and combinations thereof. So it’s a key element and so it’s part of that whole building the vertical solution all the way from the investor down to the asset.

Lou Kerner:

Cool and Daniel so Luxembourg no taxes, that’s a broad.

Daniel Glare:

I’m not going to say anything on camera. I completely agree with you with regard to liquidity. But let me, maybe, give you another angle to liquidity. First of all, the promise that was made to ICO was that you buy something, you dump in our exchange, and it’s automatically liquid, right? And for STLs, we have the same type of view, although nowadays when you raise equity, it’s totally liquid. So why suddenly should it’d be totally liquid? Because you’re going to put it on an exchange. That may not be the expectation of investors.

So liquidity is also … Especially in Europe where you don’t have that easy access to capital market where you can take that asset and use it for collateral. So you’re not going to sell it, you’re going to use it to create another form of liquidity for you. We’re working with a company in Finland that do real time personal credit and so now they use data from the consumer and they say, yes, you can have credit or not.

Tomorrow with a tokenized-assets you could say, “Well, we cannot give you credit, but if you give us a tokenized-assets and put it in as collateral, then we can give you the credit.” And by the way, that given under another angle, so to fractionalization, because you may not have to give the whole asset, you can just give a fraction of it to basically guarantee the loan that we’re going to give you. So that’s another benefit and that’s another view on liquidity that so far we’re not addressing. We just think about liquidity, exchange, selling immediately. As an investment ...

Lou Kerner:

So I’m thinking, okay, you’ve got a private assets before tokenized; can’t you just go out and get a loan against that? How does been tokenized help?

Chris Houser:

Fractionizing, I guess.

Daniel Glare:

Fractionalize is simply if I buy a few shares in the company that is not listed and you want to put that in collateral against a loan or against anything, the bank is not going to take that, right? It’s not going to happen. So, of course, we agree that if you do that with startup, the value of that token will be zero. But if you work with midcap company that has the value, that have audited books or real estate, real estate has a value that you can easily check, so you can get liquidity from that asset. You wouldn’t have that if you don’t use a tokenized asset. That’s not going to happen.

Lou Kerner:

Can we start with the panel by saying where we are today? Let’s finish the panel; we’ve got five minutes left. Let’s finish the panel. Chris, you said that 2018 was going to be the year of the STO, didn’t quite happen that way. What do you think 2019 holds for us?

Chris Houser:

So if you look at the total of crypto market cap right now, it’s about $220 billion. I think security tokens will start to really come to fruition, hopefully, in 2019, so it was off by a year. But as these midcap companies and other companies start to tokenize and bring hundreds of millions of dollars to the crypto space, I think we can easily see that number go from $220 upwards over trillion a dollars in 2019. And if not then by 2020, for sure, I see us … the crypto space hitting a trillion dollars.

Lou Kerner:

By 2020 if not ‘19.

Chris Houser:

Right

Daniel Glare:

Well, I totally agree, but I would say that the big swing is not going to come from the US but probably from Europe. I think if you take examples such as company like Skype, the regulation that was existing at the time in the US prevented your Skype from growing and becoming successful in the US. It first and started to be successful in Europe. You can say the same thing for Spotify. So regulation here exists, but if it doesn’t move fast enough, we in Europe will move faster.

Lou Kerner:

And so where do you think of ... We’re looking at the end of 2019, what do you think of the market cap of security tokens?

Daniel Glare:

Well, I don’t think that it will move that fast, to be honest, because you really need to educate people, you need to work well with the regulator to give them confidence that they can collect tax because, ultimately, the only way to get they’re going to support you is by proving them that there is a system that was working and that they’re not going to lose out of it. So it will take time to get there but the moment that we will get there, I think, the market will truly explode.

Lou Kerner:

Great.

Timo Lehes:

This isn’t one of those ones where it’s like everybody already answered it.

Lou Kerner:

Go for it.

Timo Lehes:

So I mean, my point of view on this one is, it’s going to take a hell of a lot longer than we expect and when it happens, it’s going to happen way faster than we can anticipate. The market will change in a way that we don’t necessarily understand. We can all start to see it here. I don’t know … I don’t know exactly what it’s going to happen, but it’s happening. The room is filled with people who are making this happen.

Lou Kerner:

Yes. There’s something called Amara’s Law, he was a professor at Stanford in the 70s and he coined the Amara’s law, which is the fact that the impact of all great technological change is overestimated in the short run and underestimated in the long run. I think that’s exactly what you just said and I totally agree with that. This will be the same as everything else. So it might not be a trillion next year, but it’s coming.

Jamie Finn:

I’m actually looking more at innovation than numbers, like top line numbers. So, I think, what you mentioned Daniel, things like when you can start using security tokens as collateral in various models. Like, I’m an avid user of Nextel, I think it’s a super cool service and once you understand what’s Nextel does and then you extrapolate that into the security token domain then you realize, “Wow, we can … this is going to be massive once this is on a horizontal global infrastructure that actually works from a regular regulatory point of view.”

And then, like today, you can just chuck in your bit coin and then get cash out and then, it just works. And if you extrapolate that out to over a trillion dollar security token industry, that’s huge. And so talking about liquidity and talking about innovative financial instruments and products going forward, that’s what I’m looking for in 2019 more than like top line tokenized numbers

Lou Kerner:

And on the innovative front, I agree with you completely. I’d say, here, what I’m most excited about is the fact that now this can be anything. Securities can be anything but a smart contract on top of them and they can be … they can be anything, I feel, right now in security token industry. It’s like … I feel like the beginning of television, the very first TV show was a guy sitting at a desk with a microphone doing radios and “Hey, now were on television.”

And so we’re taking there even though it was a brand new medium and to some degree you begin to feel like the beginning. That’s what we’re doing now. We’re just taking everything and putting it on. And, so, just with last couple … I don’t know if any of you have any, just real quick, here’s an innovation that nobody’s thought of that now we’re going to be able to do. I know that’s a tough question.

Jamie Finn:

I mean, look, I think a lot of people, some of them they’re already doing it. Like taking a security that’s only in the US and making it available to the whole world is a pretty significant move forward.

Lou Kerner:

Well, terrific. I thought the panel was great guys. Thanks a lot.

Chris Houser:

Excellent.