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Security Token Insight: Expert Interview with David Adams, Senior Associate at Clifford Chance

Expert Interview


 
David Adams, Senior Associate at Clifford Chance

David G. Adams

David G. Adams focuses on broker-dealer, investment adviser, and investment company regulatory and enforcement matters.

David has extensive experience advising multi-national clients on the establishment and maintenance of complex cross-border brokerage and asset management operations. He also advises clients regarding SEC and FINRA inquiries and investigations, internal investigations, M&A transactions, advertising and marketing considerations, the creation and negotiation of key brokerage and advisory agreements, and AML/Sanctions compliance.

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Transcript


 

Adam Chapnick:

Welcome to Security Token Insight brought to you by the Security Token Academy. The Security Token Industry is here and it’ll provide a key foundation for the evolving financial internet. The Security Token Academy provides insights about this new era for Security Token enthusiasts, investors, and issuers. The Security Token Industry is here and you can get involved.

Hey everybody. I’m Adam Chapnick. Coming up on today’s episode of Security Token Insight in your Security Token Investing News, Polymath and Archax team up for Token listings. We have an expert interview with David G. Adams, Senior Associate at Clifford Chance. That and more is coming up on this episode of Security Token Insight. Now it’s time for your security token investing news.

Up first, Cutter’s Financial Center Regulatory Authority has announced a ban on all services which involve cryptocurrencies throughout the Cutter Financial Center. The QFC, Cutter Financial Center, is a special jurisdiction which has its own unique, legal business, tax, and regulatory infrastructure. The band does not include Security Tokens however, the ban on cryptocurrencies was instituted to counteract terrorism and money laundering. You can find out more about the latest Security Token Regulations by visiting our website, securitytokenacademy.com and click the “Education” tab and select “Regulatory Timeline.”

In other news, London’s digital securities exchange, Archax, has announced a partnership with Polymath, a Security Token Platform which issues and manages Security Tokens. The new partnership will see Archax supporting tokens which utilize Polymaths ST20 Standard. Archax plans to launch their exchange later this year. And finally Tokeny and PwC Luxembourg announced plans to launch a joint business relationship aimed at bringing new and innovative services in the fields of capital markets and asset servicing. PwC Luxembourg issued this statement in a press release.

Quote: “All aspects of the transactions such as accounting, legal, regulatory, tax, risk assurance, cybersecurity custody, et cetera will be considered and managed. The collaboration also aimed at helping market players to bridge the gap between the traditional mindset to the next state of tokenized economy, helping them to move from the current state to this new world in leveraging both PwC Luxembourg’s and Tokeny’s Solutions considerable experience of traditional business. Their understanding of the technology and an effective technological solution.” That’s an unquote. By the way, Tolkeny is a gold corporate member of the Security Token Academy. To learn more, go to our website, securitytokenacademy.com and click the “Directory” tab and select “Corporate Member.”

Have you listened to our latest podcast? Be sure to check out our Security Token Stories featuring Derek Schloss as he sits down for one-on-one interviews with Security Token Industry leaders. Go to our website, securitytokenacademy.com click the “Interviews” tab and select “Podcast.” The Security Token Academy is proud to present an expert interview with David G. Adams, Senior Associate at Clifford Chance. Clifford chance, of course, is a global law firm providing multidisciplinary, transactional, regulatory, risk management, and litigation services to established and to emerging participants in the FinTech sector. We sat down with David to discuss the problems with securities issuance and trade as well as the benefits of Security Tokens for investors. Take a look.

David G. Adams:

We’ve been working on a lot of really exciting deals and whatnot in the digital assets space. I think one of the most interesting things that we’ve had the opportunity to work on recently is working with a transfer agents here in the United States, trying to help them as we help a lot of our other clients decern the dividing line between software providers and those who can operate in an unregulated space versus those who are broker dealers or other types of regulated entities and what type of software programming, smart contract creation, et cetera lends itself to being labeled a broker dealer or in some cases an exchange.

We’ve got a lot of great development as far as products and accolades, so recently we’ve been awarded spots in the Legal 500 and Band One and Two both in the US and outside the United States. Clifford Chance has been making a very concerted investment in the digital asset and FinTech space and I think you can see that playing out in the awards that we’re winning just around the world.

You know, there’s been a lot of evolution I think on the regulatory side, at least there’s been a lot of activity. I think that a lot of people in this space were really hoping for a little bit more clarity from the SCC, but to the SCC’s credit they have been commenting, it may just not be as clear a commentary as I think the industry would like. I think the industry is also evolving in the sense that there’s a lot more regulated players and people taking the regulations seriously whereas before, it was kind of “Don’t ask. Don’t look before you leap. Just make that leap.”

I think people were seeing were some of the ICO related enforcement actions that that may not have been the best move. But hopefully what we’re going to see is as the regulatory landscape flattens out, people get a little bit better idea of what is allowed and what is not allowed. It really opens up entrepreneurs to work within a set of guidelines that they can use to really push their products forward. And that’s what we’re really hoping to see in the next few years I would say.

I think a lot of what you hear nowadays, particularly when you’re talking about Blockchain and what it can bring to the table, I think is that there’s too much going on in the market at the moment and too much that has to be involved in the particular trade. You have transfer agents, clearing houses, broker dealers, all various, different types and intermediaries that evolved in a system that was very different from the almost instantaneous settlement you can have on a blockchain network. So I think that over time, I think the SCC will always be looking for gatekeepers in order to hold people responsible for bad activity that occurs in the US securities market, whether it’s on a blockchain or otherwise.

But I think that the SCC is starting, I hope, to get the idea that maybe we don’t need all of these different players. But I think it’s going to take a lot of time and I don’t know that we’re ever going to see things flatten the way a lot of people would like to see such that all you’re really worried about in a security’s transaction is person A trading on a blockchain based exchange, going through a smart contract, having an executed, and just being done. I think that we’re a long way off from that. There will always be intermediary somewhere in the mix, it’s just a matter of defining who those will be in the future and as we move forward in the industry.

One of the main things about Security’s tokens, tokens in general, even digital currency, is the approachability factor. And I think that as we see things like Libra come to market, if it ever comes to market but I think that it will. It got a lot of backing behind it. But I think as we see those types of stable coins and what not getting into the market, proliferating, people will get more comfortable with the technology. And as that happens I think that people will be more comfortable with the tokens and I think over time you’re going to have this proliferation of people who are comfortable with the technology, comfortable making the purchases, and they see something, particularly people my age even younger, that they feel like is theirs in a way as opposed to something that belonged to their parents or their grandparents.

I think that certainly in the regulated markets, we’ve seen a couple of recent reggae plus offerings so those are open to retail investors, people are able to access the market in a way that I think they may be a little bit more comfortable with than having to go through a broker or something along those lines. I also think that what we’re also seeing that tokens are great because they open up people’s imaginations in a way. I think that there’s actually a Net’s player who recently announced that he’s essentially tokenizing the future revenue in his basketball contract that he was going to be paid over time in order to get some money now and then make investments with. And I think that that sort of thing is not something that we’ve talked about for a very long time.

It certainly isn’t the first time someone’s tried to do it but I think that it’s got a lot buzz behind it and I think it’s going to be interesting to see if this is just one of many or a one off thing. So I think that all of those things really lend themselves to tokens and to people getting more comfortable with them, being excited about them, and moving forward being able to get this into a more comfortable space where people really want to use this and the institutional investors, retail investors, everyone’s a little bit more comfortable with the technology.

Adam Chapnick:

We have the full interview with David Adams on our website. Be sure to check it out and by the way, Clifford Chance is a Gold Corporate Member of the Security Token Academy. To learn more, go to our website, securitytokenacademy.com and click the “Directory” tab and of course select “Corporate Member.”

Did you know you can get the latest industry updates in our free weekly newsletter, the Security Token Edge? Well, the newsletter is packed full of insightful information about the Security Token Industry. To subscribe and get your free weekly copy, go to our website securitytokenacademy.com. We also invite you to check out The Digital Wrapper on Medium. It’s our “Behind the Scenes” series with the teams building out the Security Token Industry. These are in-depth interviews covering a wide variety of topics. You can view these when you follow us on Medium. You can find more information on our website, securitytokenacademy.com.

I want to remind our viewers that if you have any questions about Security Tokens be sure to email us and we could answer them right here on a future episode of Security Token Insight. The address is [email protected] Be sure to include your name with your question. One more time the address is [email protected] You can also learn more by visiting the frequently asked questions page on our website by clicking “Where Else” on the FAQ tab. Our frequently asked questions page is packed full of Security Token Industry terms and concepts. Today’s term of the day is, “Cap Table Management.” Cap table management platforms enable broker dealers, issuers, and investors to visually manage portfolio data on a single platform including accurate capitalization tables, communications, and compliance.

Alrighty, that’s it for today’s episode. Be sure to follow us on Twitter, Facebook, Telegram and Medium. And don’t forget to subscribe to our YouTube page so you don’t miss out on any of our videos and expert interviews. And a big thank you to all of our Gold Corporate Members as well. We invite you to learn more about our corporate members by clicking on the “Directory” tab and click “Corporate Member.” I’m Adam Chapnick. For everyone here at Security Token Academy, thanks so much for watching. You can watch all episodes of Security Token Insight on demand. Visit securitytokenacademy.com, click on the “Insight” tab and select “Insight Show.” It’s just that easy.