Oscar is currently one of the Top 10 Global Thought Leaders in Equity Crowdfunding, a Top 5 Fintech Influencer, Top 10 Blockchain and a Top 50 InsureTech. He has published an eBook that has been downloaded in over 20 countries, and been distributed by partners worldwide.
Oscar is a featured speaker on Fintech, regulated, equity crowdfunding, compliance, shareholder management, investor relations, and transparency in the USA, Australia, UK, Germany, France, Netherlands, Canada, Singapore, Indonesia and China. He speaks to audiences covering alternative finance, security token offerings, equity crowdfunding, STO, TAO, ICO/ITO, RegTech, insurance, banking, legal, and crowdfunding. Oscar also advises the world’s leading research, accounting, law firms and insurance companies on the impact Blockchain, STO, TAO, ICO, Fintech, RegTech, LegalTech, InsurTech and OrgTech is having in their business.
He is a member of the Crowdfunding Intermediary Regulatory Advocates (CFIRA) in the USA, and a contributing author to The Fintech Book, the world’s first crowdsourced book on Fintech globally. He writes for Sharewise, Locavesting, Equities.com, Business.com, Crowdfund Insider, Crowdfund Beat, Bankless Times, and Agoracom.
Oscar has been recognized as one of the 10 most influential Hispanic Leaders in Canada. In May 2010, Oscar A. Jofre Jr. was recognized by the Rt. Hon. Stephen Harper for his accomplishments.
Oscar was awarded the Vision 2012 Business Man of the Year by the Toronto Hispanic Chamber of Commerce on September 2012.
KoreKonX: Creating the world's first highly-secure permissioned blockchain ecosystem for fully-compliant issuance, trading, clearing, settlement, management, reporting, and corporate actions for tokenized securities worldwide. KoreConX is the all-in-one, AI-based, global blockchain platform that manages the full lifecycle of tokenized securities to ensure compliance with securities regulation and corporate law. Connecting companies to the capital markets and secondary markets to facilitate access to capital and liquidity for private investors.
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Hey everybody, I’m Adam Chapnick.
And I’m Amy Wan. Coming up on today’s episode of Security Token Insight; in your Security Token Investing News find out which platform plans to tokenize $1 billion in assets in just four years. Plus, we’ve got an expert interview with Oscar Jofre, the founder, president, and CEO of KoreConX. And find out how you can attend our next Security Token Meetup in New York city. That and more is coming up on this episode of Security Token Insight.
Now it’s time for your Security Token investing news. Blockchain based crowdfunding platform Smartlands plan to tokenize $1 billion in assets by the year 2023. The goal is part of the four year roadmap for the UK based company. Smartlands will tokenize assets in commercial and residential real estate, renewable energy, agriculture and technology. The company is also thinking about tokenizing private shares of a pre IPO billion dollar company here in the US.
In other news Security Token compliance platform TokenSoft has announced Security Token support for transfer agents. TokenSoft clients will be able to select or partner with a transfer agent of their choice to issue and administer their Security Tokens. This’ll help manage compliance, manage theft or loss, and provide real time monitoring. The TokenSoft process covers the entire lifecycle of a digital asset, including onboarding, issuance, custody, and ongoing administration.
And finally, Security Token trading platform tZERO has opened its TZROP Security Tokens to non-accredited or retail investors. This means TZROP tokens can now be traded by all investors regardless of their net worth. The move gives investors direct exposure to tZERO’s revenue growth through its quarterly dividend model. By the way, both tZERO and TokenSoft are Gold Corporate Members of the Security Token Academy. To learn more go to our website, securitytokenacademy.com. Click on the directory tab, and then corporate member.
Have you listened to our latest podcast? Episode four of Security Token Stories is out right now. In this episode here from Nick Cowan. He is the CEO and founder of thee Gibraltar Stock Exchange Group. A financial services portfolio that includes the Gibraltar Stock Exchange, the Gibraltar Blockchain Exchange, and the JUNO Fund Administration. In this interview, Nick Cowan walks through the launch of the Gibraltar Stock Exchange in 2014, Gibraltar’s Blockchain initiatives, and more. Here is your preview.
My background was... I was a trader in cash and derivatives. I worked in London and Japan. I spent about 20 years in investment banking. I then became the Global Head of Equities, which was quite a big job. It’s a classic over promotion. I did that for five years and then left before I got found out. I then spent time trading my own capital about six, seven years as a home trader. And then about seven years ago I was asked to help out this little jurisdiction here to see if we could get a stock exchange open here. I said to my wife, I was just popping out to do a quick journey and that was seven years ago.
So, we moved here and we started on this journey. And in terms of a couple of things about this little place, I just say it’s a British overseas territory. So we are still for now in the EU. Obviously that’s about to change. And interestingly about Gibraltar is there’s a few core pillars of the jurisdiction here, about 30,000 people. About 15,000 people walk across from Spain every day to work here. Big businesses are online gambling.
We have I think 40% of the global volume, so it’s a big business. So in terms of that I guess infrastructure and tech, there’s been that platform here for about 25 years. Just on that, it was also one of the first jurisdictions in the world to have remote gambling legislations. So that will be relevant when it comes to distributed ledger technology regulations, which I talk about in a moment. So the jurisdiction has tourism, bunkering, which is filling up ships with petrol before they go off and get into trouble with Iran when it gets to the Suez Canal; and tourism, and financial services.
So financial service is obviously a fast growing part of the jurisdiction. And then if you look at our evolution, we opened as a stock exchange in 2014. We were the last country in the EU that didn’t have an exchange. That was very much our thinking at the time. And we think that being a gateway to the EU, we could disrupt things in our own way by being faster to market and competitively priced. And then DLT started to evolve and we were involved as an exchange in structuring the world’s... actually the world’s first asset backed security, the Bitcoin. This was 2015 so we were I guess ahead of our time. Give you an inkling? The price was $300 at the time. So just shows you how quickly things move.
And that really took us into the world of, “Okay, how does Bitcoin work? How do you buy and sell Bitcoin? What is a hot wallet? What is a cold wallet?” All these things were completely new to us. And we had to sit down with our regulator and say, “Look, we want to structure this asset backed security on Bitcoin.” And they asked the same questions, “What the hell is Bitcoin?” That’s so at least we went on a journey together. Now actually to be fair, around that time the industry here in Gibraltar and actually industry outside Gibraltar, we’re starting to engage with our government. And obviously we were involved to a degree because of the Bitcoin thing.
And the conversation started, “Can we regulate this sector in any way? And if we can come up with a regulatory framework, could that serve Gibraltar and the clients of Gibraltar in a way that other jurisdictions may not be able to or may take longer to get their act together?” And to be fair, the government and the minister will say this, their initial reaction was, “Absolutely no interest whatsoever. Cryptocurrencies are you know, money launderers and thieves.” And I said, “No, that’s investment banking.” I’m kidding. But, the reaction of the government was very, very negative. And so they set up a working group to make the problem go away. And the working group actually came back and said, “We should do this.” So actually the minister said, “Okay, let’s be serious. If we’re going to do this, how do we do this?”
So fast forward to January, 2018, it became law here. So we have a regulatory framework. Called the DLT, Distributed Ledger Technology. And we’re not trying to regulate Bitcoin because you can’t. What you can do as you can say to any client, anybody in corporate, any company, “That stores all transmits client assets using the Blockchain, well you can have a set principles which you have to adhere to in order to be licensed.” So, if you were in jib and you used the Blockchain for any asset that’s not yours, you’ve got to be licensed.
That really put us on the map as a jurisdiction as actually the first in the world. So that was really interesting for us as a stock exchange. We had got to the stage where we were thinking, “Okay, we do fixed income and we do funds. What are we going to do about equities? And should we spend money putting in place a historic, almost archaic technology solution?” This was 2017... or you know what, “Can we just go straight to Blockchain? And if we go straight to Blockchain, what does that mean? How do we actually have a securities exchange trading securities using DLT, is it possible? What about the regulatory framework? What about legal? What about KYC? What about AML? What about all these wonderful things? How on earth are we going to tackle this?”
So we made the decision that actually, “You know what, we are going to do this. We will basically, if you like, leapfrog the traditional world and we’re just going to go straight to DLT.” Knowing that’s going to take us on a bit of a journey.
To listen to this podcast and many more go to our website securitytokenacademy.com. Click on the interviews tab and select podcast.
The Security Token Academy is proud to present an expert interview with Oscar Jofre. Oscar’s the founder, president, and CEO of KoreConX. KoreConX is the first highly secure permission Blockchain ecosystem for fully compliant tokenized securities worldwide. The company is a Gold Corporate Member of the Security Token Academy. I sat down with Oscar to discuss how to remove friction in the private capital markets and why traditional companies are turning toward tokenization. Take a look.
Can you kind of bring everybody up to speed and explain what is it? Why was it created?
Thank you. KoreConX, its roots were really looking at their private capital markets and seeing how fragmented it really is. Spending the last 30, 40 years of my career as an entrepreneur, I noticed that nothing had really changed, that certain service providers still exist. We keep bringing in new regulations to allow stimulate investments into company, but ultimately we still have a problem in the ecosystem... is that we have all these array of service providers globally, not just in the United States, but globally and they’re not connected. So the publicly listed market has a connectivity, has an underground infrastructure that brings it in. And that’s where KoreConX in.
We are the world’s first infrastructure to bring all the stakeholders together; and this ecosystem, the lawyers, the accounts, the companies, their shareholders, their board of directors, their legal advisors, the broker dealers, the secondary ATSs. Everybody under one infrastructure to remove the friction that currently exist in the private capital markets.
Yeah, it’s a lot of friction, isn’t it? So I know you had some involvement way back in the JOBS Act. Can you tell us how you were involved, how that happened? How it transformed the financial industry from your point of view?
For me as an entrepreneur meeting David Weild, Chris Torel, Sara Hanks, and many others who were really the creators of the JOBS Act. David Weild, of course being the father that JOBS Act. It stimulated me to hear how this new transformation was going to change how companies could access capital. So obviously we saw that, we saw everybody jumping in to building platforms. We needed to build an entire ecosystem that didn’t exist. How would investors come through? So obviously it didn’t get the big bang we were all looking for right off the bat. But, now looking back we’re almost 10 years into it, I know time flies. It’s actually coming to full fruition.
The JOBS Act really is the spark plug that actually revolutionized the entire world; private capital markets. People don’t realize the impact of JOBS Act not only had in the United States, but Canada, the UK, Singapore, Thailand, Chile, Argentina. All the countries around the world who started initiating these new rules to allow the investor to invest in companies online. And of course the maturity of that market is just finally coming to fruition today. And we’re very glad we’ve been there since the beginning.
Yeah, it’s amazing. So let’s dig in a little bit to KoreConX. You guys help private companies manage their company records, the capital market activity, their fundraising, their investment... it’s sort of centralization really. We talk about decentralization in the Blockchain world, but why is your centralization, why is that so important?
Well, it comes down to this. As entrepreneurs we get an idea to build a company. And the first thing we do, we start separating, how are we going to run it? We’re going to get operationally... we’re going to get our accounting software, and then we’re going to get a CRM, and we got to make sure it’s interconnected. Everything we do for the operation of our business, we make sure it’s seamless. No more duplications of effort and all that.
Well guess what, what happened to the rest of the business? The C level, the board of directors, the shareholders, the other stakeholders, the lawyers, the auditors, broker dealers. And that was the missing link, that part of the business is still operating like it’s 1800s. And the reason companies are not able to access capital, it’s not because there’s not enough capital out there, there’s tons of it. It’s just companies need to be ready. So yes, KoreConX is in all in one. One platform to manage your CapTable, your documents of your company, and all the people associated with your company from that point of view.
Amazing, so obviously compliance has to be a big part of the KoreConX business and I know it is. How is that handled?
Well, the one good thing about compliance or being compliant is regulators set out rules, and those rules have been there for a while. I mean it’s not like they change overnight. So it’s like accounting, you embed them into code and you ensure that people become aware of them. The one thing private companies have at as a disadvantage, it’s not that we don’t have the expertise, it’s just we don’t have the resources. So with the KoreConX platform, you’re able to manage all these corporate activities and along the way it’s guiding you based on that activity, what you need to get done. You no longer have to go through check balances or trying to remember what’s on top of your head.
Personally for me, that experience I felt it as an entrepreneur. You rely on your lawyers, which we need to. But, every once in a while they’re human beings, they’re going to forget little things. Well those little things end up costing us money and time. So what KoreConX is doing is implementing all those rules. And as rules change, we have an entire infrastructure within KoreConX, right from our director of compliance and registrations to even our advisory team. To make sure that we’re up to date with all the ongoing changes in the regulation framework.
Amazing, so you also... I know you have some features that are specifically designed to help your clients grow. Can you talk about what those are?
Well, obviously there are many different ways a company can look at itself from growth, but obviously the big carrot that every company wants to do is access capital. And capital is a very painstaking process with the thousands of companies every year that are looking for capital. A very small percentage is venture capital, but the rest of us are looking at it finding that right investor. So what we’ve done, we have built a global ecosystem of partners and we along the way as well recognized that there was another problem within that ecosystem. Everybody’s got a hand on everybody else’s pockets.
So KoreConX created a charter where we are not going to be that kind of company. Today we have over 300 plus Kore partners worldwide that are there to help companies access capital; broker dealers, secondary ATS operators, venture capital firm, family offices. We need to remove the friction and the friction at times is caused by human beings and companies that are actually taking fees where they shouldn’t be. So this is part of what we bring into our ecosystem in our platform where companies can use in order to gain access to capital in the marketplace.
Yeah, that’s definitely the holy grail for most early stage companies for sure.
Yes, of course.
And then so once they, God willing, they do secure some of that capital they have CapTable management that they have to deal with. How important is that and how does that get handled? The KoreConX with the CapTable, and also with traditional and digital assets?
Great question. This is the lifeblood of how KoreConX has been known for the last number of years. And CapTable people go, “Well, you know I can manage a CapTable.” Of course, Excel spreadsheet. The problem with a CapTable what people don’t realize, it’s an interconnected piece of your business. It’s connected to all the documents in your minute book. It’s connected to your holders, individuals, and entities. So what KoreConX has done is built a platform that not only manages a CapTable, it brings together all the documents associated with that transaction.
And all the different stakeholders, your shareholders, they’re giving up portfolio management for them to log in, view how much of that equity they own in your company or debt, or digital security, or options warrants, the benchers, Crowd SAFE; and be able to communicate with a company, be able to receive reports, news releases, and give them the ability to offer them online e-voting. For the company you have one place where you manage everything. You’re able to see everything real time.
If there’s something happening within your shareholders’ communication, you have it. You have the ability to give them the opportunity to be able to trade their securities on a secondary market. And if they do, you have the pleasure of knowing that your CapTable is being updated automatically, whether traditional assets or digital assets. It doesn’t make any difference to KoreConX.
Wow, so we love to go deep nerd here, which is what we’re doing and I love it. And I’ll just say founders who have not been through this don’t realize what a nightmare it is. And the idea... I’ve dug into KoreConX as you know, and the idea that you’re able to connect all of those different elements that have to do with CapTables, and the options, and the vesting, and where you recorded in the minutes. It’s a huge pain point that can really torpedo a ton of stuff in a business. It’s kudos to you guys.
Oh, we have some clients today that we’ve been so fortunate to grow with them. They started with a 100 shareholders, 100. Today they’re sitting at almost 250,000, and counting. We have one client right now, their goal is to have 1 million shareholders and that’s only possible today with a platform of KoreConX. Because in order to manage people like that, you need to communicate with them. You need to have a strategy, but more importantly you need a platform to manage all of that. Otherwise your life will be... it will be transformed.
Yeah, no doubt. So okay, now speaking of deep nerd, tell me about the transfer agent and the share registry services. These are also things that people don’t understand always how valuable that is until you don’t have it.
Exactly, and we all know you say the word, transfer agent or share registry provider, and people... they feel like they’re getting a root canal sometimes. Because that business has been so old and antiquated the way it operates, and when people come to KoreConX they go, “So where do I go from my transfer agent?” I go, “We deliver it within the platform.” We are even disrupting the way that business is being done because the data belongs to our clients. The data is theirs. They shouldn’t have to pay for it to see it and view it real time. So we’re delivering that service within our platform and multiple jurisdictions. But, most importantly we are not removing the existing transfer agents that are already there in place.
What they don’t have is technology, and that’s where the infrastructure part comes in with KoreConX. We’re able to bring that to a small base transfer agent in Australia, New Zealand, Hong Kong, US, Canada; doesn’t matter. And give them the power of the KoreConX platform to service not only our clients, but also theirs in one platform. That’s the key.
Yeah, so you guys don’t have a wallet per se, but you’re offering companies and their shareholders portfolio management. Can you explain that?
Glad to do so. The one thing about the wallet is that it’s got so many different issues out in the market and we applaud it. A wallet is where you put your money in, and that’s as simple as that. And I’ll leave it there. Your portfolio, your investment portfolio, which includes securities are not held in a wallet. And keep it in mind that since we are offering registered transfer agent services or share registry services, the transfer agents have a regulatory obligation to maintain in the corporate records. Therefore, instead of giving investors a wallet which could be hacked or anything like that, here the investors can log in to view their portfolio 24/7 through their mobile device or online on the web.
Be able to view exactly what they own, be able to do transfers, and be able to be connected to a registered ATS. Provided the company has met the requirements of course, and receive all the other information. And all of this they don’t have to remember any long string codes. They don’t have to worry about being hacked. They don’t need to be worrying about gas fees. They don’t need to worry about any of those elements. This is purely a digital securities for them.
We have the full interview with Oscar on our website. Be sure to check it out.
Did you know that you can get the latest industry updates in our free weekly newsletter, the Security Token Edge? 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 is our new 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 out more information on our website securitytokenacademy.com.
Now live on the Security Token Academy’s website, a new expert video series: Global Capital Markets and Security Tokens, with David Wield. Part one covers the state of the market. David is the founder of Weild & Co, and is the former vice chairman of NASDAQ. He’s also a 30 year veteran of Wall Street. In this new series we cover the growing intersection of Security Tokens and traditional finance as well as the benefits of tokenization. Here’s your preview.
What do you in your mind... what are the applications of Security Tokens? How do they fit in with today’s finance world?
Well, I think first and foremost, I think we’re going to be able to strip out costs from the issuance of securities and the trading of securities in general. And when you do that you also enable certain kinds of securities that [inaudible 00:23:40] have probably been cost prohibitive. And what I mean by that is, I think the frequency of distributions can be increased very significantly. Why is that important? It’s important because retail in particular values higher frequency distribution.
So if you look at a traditional bond, it may pay twice a year. If you look at a closed end bond fund; there are two forms, one’s that pay quarterly distributions versus monthly. The monthly ones that trade on the New York Stock Exchange, NASDAQ actually traded about a four or five percent premium to those that pay on a quarterly basis. So I suspect that what we’re going to see is the tokenization of certain kinds of assets in a way that they will pay weekly distributions, maybe even daily distributions at some point.
That’s interesting. It’ll be interesting to see how that curve is shaped when you go from quarterly, to monthly, to weekly, to daily in terms of the premium you were describing. What do you think about that?
Well, if you’re a retiree you’re going to live week to week, you’re managing your budget that way. So having something actually hit your account distribution, hit your account on a weekly basis is something that I think that retirees would really value. So I think it will happen. I think it’s just a question of time and I think that it will be highly valued by at least some subset of the market.
Yeah, no doubt. So why is this a preferred method as opposed to issuance of traditional securities? What benefits did the Security Token have over traditional security?
Well you can hold it directly in a cyber wallet if you so choose as opposed to through a security, a traditional security account which would be held by a broker dealer. But I think that the real advantage is that there are a number of... in certain markets there’s an application layer that is wedded to the token. And so for example, you can automate all of the legal and compliance checks that are done in private markets; to be able to trade securities in private markets, stripping out a lot of the cost, and some of the constipation from, having tokens or securities if you will, move from the hands of one investor to another. So there’s a big uptick in ease and efficiency for certain kinds of applications. And so my suspicion is that that’s where we’re going to see most of the early adoption.
What are some of the real world uses where Security Tokens offer an advantage over traditional securities?
Well if I would was to apply it to asset classes, if you drive down the cost of tokenizing or securitizing an asset for instance, we might be able to... we’ve already actually seen the beginning of this tokenize a particular building.
And it would then allow instead of somebody having to buy a basket of buildings through a real estate investment trust, you might be able to actually say, “Okay, here’s an interest directly in the Empire State Building. Or in a tower, the Sears Tower.” So you can then... the old cliche which is you know, “Location, location, location.” It will actually allow investors then to put together portfolios that are very much location based type of real estate.
So for example, whether it’s warehouse facilities, or a multifamily residential, or office properties; and so as a consequence, I think it will create greater overall efficiency of capital allocation to the real estate market. So I think it’s the beginning or the dawn of a brave new world in certain types of asset classes, as opposed to forcing you to buy a big basket of properties where you don’t have control over the actual building selection within a portfolio.
Got it. Now when it comes to issuers, what do you generally recommend? That an issuer issue a Security Token or start with a traditional security and maybe tokenize later?
Be sure to check out this new video series on our website, securitytokenacademy.com.
The Security Token Academy invites you to save the date for our next Security Token Meetup. It’s taking place Thursday, September 26, in New York city. The meetup will be inside the Sunset Terrace at the Chelsea Piers from 6:30 until 9:00 in the evening. Join Security Token experts and financial services professionals for an evening of informative discussions, networking, food and drinks. I’ll be there moderating a panel discussion that includes our professional and corporate members. Seating is limited to this free event, so to learn more, visit 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]
All right, 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 interviews and expert videos. And a big thank you to our platinum corporate member, Merrill Lynch and all 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 Amy Wan.
And I’m Adam Chapnick. For everyone here at Security Token Academy, thanks so much for watching.
You want to learn more about Security Tokens from the top leaders in the industry? Be sure to visit our website securitytokenacademy.com and click on the Interviews tab so you can stay connected.
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