Kinsey Cronin, Vice President of Business Development, is a much sought-after speaker, thought leader and college lecturer whose forte is fundraising. In particular, the Pepperdine University grad excels at helping entrepreneurs navigate JOBS Act crowdfunding regulations to run large capital raise campaigns for equity and token offerings. A rising star in the blockchain/cryptocurrency space, Cronin worked for StartEngine and Creative Artists Agency (CAA) before joining the Prime Trust executive team.
Prime Trust is a chartered Nevada trust company that as an SEC-Qualified Custodian provides custody of cash, tokens (aka “coins”), stocks, bonds, private business interests, and other assets. It also provides compliance and specialized services relating to funds processing, AML/KYC compliance, and transaction technology for the new digital economy. As a blockchain-driven trust company, its mission is to provide portals, platforms, brokers, real estate syndicators, and direct-issuers with best-in-class solutions to seamlessly meet the needs of their securities offerings and of exchanges and secondary markets. As a trust company, Prime Trust provides a wide array of account types, including simple custody, IRA’s, asset protection trusts, health savings accounts, and college savings solutions, all of which are designed to hold any asset class.
Welcome to Security Token Insight brought to you by the Security Token Academy. The security token industry is here and will 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.
Hi, I’m Adam Chapnick.
And I’m Amy Wan. Thanks for joining us.
Coming up on today’s episode of Security Token Insight: In your security token investing news, stock exchanges around the world want to trade security tokens. Find out which ones. We’ve got an expert interview with Kinsey Cronin, the Vice President of Business Development at Prime Trust and she’s talking about custody. We have highlights from the first commercial real estate case study, on the tokenization of The St. Regis Aspen Resort. That and much more is coming up on this episode of Security Token Insight.
Now it’s time for your Security Token Investing News.
Our first story takes us to Canada where Canadian-based mining firm Canamex announced the release of gold and silver-backed security tokens. Canamex, based out of Vancouver, currently trades on the Canadian stock exchange and is also currently offering security tokens for the mining of The Bruner Gold and Silver Project in Nevada. They’ve set a goal of 10 million dollars, which will help in their search for precious metals in Nevada.
The stock exchange with Thailand is seeking approval for a Digital Assets Operating License from Thailand’s Finance Ministry. Thailand is currently locked in a race with Malta and Singapore to become the leader in security token trading. The Stock Exchange of Thailand, also known as the SET, must prove that it has the capabilities to implement sound, front and back end office systems, and secure token wallets before being granted it’s license. The SET’s goal of creating a crypto exchange is part of a larger three year plan to become Thailand’s one-stop capital market platform. And finally, the Jamaica Stock Exchange has announced that it plans to list security tokens as tradable assets. The JSE, which partnered with Canadian technology company Blockstation, revealed that the project has finished their first stage of a 60 day live cryptocurrency trading pilot program.
The initial stage of the pilot incorporated regulated broker dealers, market makers, and the Jamaica central securities’ depository as participants. The JSE aims to demonstrate the complete lifecycle of the digital asset ecosystem. This includes creating the platform, managing participants, and conducting trading.
The Security Token Academy held it’s fourth meetup here in Southern California on January 31st. It took place inside Maggiano’s at The Grove in Los Angeles. We had a packed house as security token enthusiasts from all over converged at the meetup for free food, drinks, networking, and more.
I had the chance to catch up with Kinsey Cronin. She is the Vice President of Business Development at Prime Trust and she’s also a speaker, college lecturer, and has previously worked as the director of business development at [inaudible 00:03:02]. She had some expert insight into the difference between a crypto custodian and a qualified custodian. Take a look.
Prime Trust is a custodian, especially one that’s well-known in the crypto and security token space.
Can you tell us what is the difference between a regular crypto custodian and what we know as a qualified custodian?
OK. So, the word custodian there is kind of... that’s really kind of the key, right? So, if you were to want to store some money, right? The idea of going to a non-registered, non-regulated financial institution, so basically a company that has technology that can hold funds, that’s similar to taking your dollars and asking your neighbor to hold it in a safe for you, as opposed to going to a bank which is regulated and it adheres to the laws that apply to banks and provides you with some additional protection. Now, when you use the word “qualified”, that’s a little bit tricky. It’s kind of barred from the traditional securities industry. We have to be pretty careful because we don’t want to be misleading. The company hasn’t been directly approved by any particular entity. It’s really in more that we are a regulated financial institution.
So, what comes along with being regulated? I assume you have to get licensure and things of that sort, right?
Yes. So we are a Nevada chartered trust company. So we had to go through the process of building a trust and registering and then complying, because it’s not just about initially getting the registration, but it’s also about following through with the rules that apply to how you can conduct your business, if that’s the type of business you are.
So, at least in the security token industry, there seems to be a lot of challenges today that the industry is still trying to work around, especially around the issue of custodianship. Can you talk about a couple of those issues or challenges?
Yeah, absolutely. There are so many reasons to have a custodian, right? But there are also a lot of challenges surrounding ... Does your custodian have the technology that matches well with what you’re doing, right? So there are plenty of custodians out there who hold all types of assets, custodians that hold art and gold and money. But do they have the infrastructure necessary to connect to a blockchain? So, if you want to custody something that’s digital, now you’re talking about looking for a tech company. So at Prime Trust, we call ourselves a tech-driven trust company because we really very much focus on the technology that allows us to hold cryptocurrencies.
Do you feel like the future of the STO industry is going to be primarily self-custodial or through a traditional custodian?
Oh, I think it will definitely be through traditional custodians.
And why is that?
Because you’re talking about the security token industry, so holding onto ... most people don’t hold their securities on their own, right? Most people do not decide to keep stacks of certificates that claim their ownership of securities in their home. Sometimes they do, and that’s okay, but typically if you are going to hold massive amounts of stocks, you’re not going to choose to leave those in your home. Similarly, it would be unlikely that you would choose to keep those on your own hard-drive or on your own hardware. It makes more sense to keep all of that together in a place of business that’s designated for that type of business.
So, if the security token industry takes off, do you see it having a large impact on companies like CD and Co. or DTCC?
Yeah, of course. Of course.
Look, it’s a new- It’s going to have an impact on the entire industry because in some ways, it’s not different at all. It’s just split ownership, and the markets will move, but there’s a technology that’s going to come in and basically change everything. And I think I probably should have mentioned for your earlier question, one of the reasons that I would expect that more security tokens would be kept with custodians than would be kept otherwise, is because people are going to want to be keeping those on exchanges, and exchanges will need to be using custodians to keep all those securities secure. But if you want to ... The purpose really behind all this is to gain liquidity which means that you are going to want those securities to be out there, available for the possibility of trading.
Do you have any insight on what the SEC’s attitudes are towards STO’s and all the issues around custodianship?
I wish (laughs). I don’t have any special insight to the SEC. I do think that from what I’ve seen, there’s been so many decisions made that are in the same direction that the security token industry is trying to move in. So, if you start with the crowdfunding laws, the JOBS Act, there’s definitely a lot of movement in that direction coming from the government side, so I would anticipate support.
Prime Trust is a gold corporate member of the Security Token Academy.
To learn more, go to our website securitytokenacademy.com and click on the Directory tab and the Corporate Member homepage.
In a first of its kind multi-city webinar on tokenization of commercial real estate, CREST, a project of the Security Token Academy, provided a detailed case study on the tokenization of The St. Regis Aspen Resort. Learn how the webinar explored the disruptive forces that are emerging in commercial real estate, or CRE, financing. Here are some highlights.
Disruption in commercial real estate has been appearing in lots of different ways. Certainly in the office category of commercial real estate, also known as CRE, the appearance of co-working companies, such as WeWork, is a major new trend. Also, the appearance of technology companies that strive to improve property operating efficiency through PropTech, or property technology, is another area of CRE disruption. But there’s a new type of disruption emerging in the area of CRE financing. It’s a way to raise money via a new solution which is compliant with U.S. SEC regulations. It’s called tokenization, and it is based on security tokens. This wave is barely just beginning, but examples are starting to emerge and that’s why we’re here today as we cover the tokenization of The St. Regis Aspen Resort.
I wanted to help our viewers take a closer look at this iconic hotel, so while I was there, I had the opportunity to meet with the hotel’s general manager, Heather Steenge-Hart. Let’s take a look at what she had to say.
This is a gorgeous property. Can you tell me a bit about it?
I’d love to. We have 179 guest rooms, 30 suites, this is one of our three specialty suites, and then we also have 25 residences, two and three bedrooms, which our fractional ownership has.
Fantastic. What else should we know about this property?
Well, the rooms and our public spaces were designed by Lauren Rote, and she was wanting to make sure that we’re bringing the outside light into the hotel, that it was like a mountainside manor, that it was contemporary yet very, very comfortable, because after you go skiing, you just want to-
... relax and so I think she really did a lovely job in portraying those goals overall.
Regarding this specific property, you had the listing of JLL and sold it to Stephane and Elevated Returns. What’s the back story on that?
Yeah. In 2010, we had the property on the market and we had reached out to a number of off-shore investors and had gotten in touch with OptAsia. We had been in touch with them on previous transactions before and we sold the asset to OptA6sia and Stephane in 2010.
And the 19 million dollars of tokens that were raised, what were those funds used for?
Well, that was a return of capital to the owner. So effectively, the tokenization is a tool sale of ownership into the property, so the current owner decided that the maximum they were willing to give away at that valuation was 18.9 percent so that’s what we put for sale and we were happy enough to fill up the entire stack. So the way that it works is that you actually sell the property into an operating partnership, you create reachers interest out of the partnership, and you capitalize the read through the sale of smart contracts. Smart contract is effectively a digital share certificate, so rather than to have your fashion papers share certificate, you have a digital form of it. It’s a beautiful instrument because all the securities regulation are actually embedded into the contract itself, and it’s cheaper, it’s faster to transact, and it offers also the ability to have a global product trading on multiple exchanges.
We got involved with Elevated Returns, first helping Stephane in trying to liquify in a different format, in a registered format, a traditional listed read format, The St. Regis Aspen, and then helped him transition his project to a tokenized solution. Prior to helping Stephane, we’ve also been very active in the whole idea of creating liquidity around non-traditional liquidity solutions around single asset real estate, and so it was a natural for us to help Elevated Returns and Stephane with their project.
Everything is going to get tokenized.
Your identity will be tokenized, you title will be tokenized, your mortgage will be tokenized, your equity will be tokenized. I mean, that is the future when everything is running on this integrated efficient immutable watching system.
To watch the full webinar, just go to the crest.io website to register. Registration is free!
Back in October, the Security Token Academy held events around the nation to signal the kickoff of the security token industry. We held security token meetups in Los Angeles, and also in New York City. Attendees who purchased tickets to our two-day cruise and conference in New York boarded the Spirit of New York yacht from Chelsea Harbor for an evening cruise along The Hudson River.
That was followed by the security token industry launch event inside The Conrad New York. Hundreds of people were in attendance as industry leaders rang the opening bell to signal the official kickoff to the security token industry.
To view all of the videos from Security Token Industry launch week, go to our website securitytokenacademy.com and click on the events tab and select Launch Event video library. The best part: It’s free! It contains a wealth of information.
Alright, that’s it for today’s episode. Make 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.
I’m Amy Wan.
And I’m Adam Chapnick, but before we go, a big thank you to our platinum corporate member, Merrill Lynch and all of our gold corporate members as well. We invite you to learn more about our corporate members by clicking on the Directory page on our website.
Well, for everyone here at Security Token Academy, thanks for watching. (music)
Learn about regulations governing cryptocurrencies and security tokens from around the world with our regulatory review. It’s on our website securitytokenacademy.com. Click on the Learn page so you can stay informed.
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