We have talked frequently over the past year but for those who haven’t yet heard of Securrency despite all of your myriad accomplishments, what is Securrency and what do you do?
We provide blockchain based financial services infrastructure to banks and investment banks. So we make it easy for existing financial institutions to get involved in the blockchain space and at the same time we make it easy for issuers who are bringing new offerings to market to come and take advantage of the security token economy.
Exactly. And do you have a few special sauce items that you sprinkle in there that set you apart from others who do similar things and can you just tick off a couple of those?
Yeah. We center on compliance so that’s the key piece and we’re going to go into a little bit in terms of progress updates on our compliance aware tokens.
So, we’ll dig into that but the bottom line, the main secret sauce is we produce shares, securities, that actually have the rules built into them such that their smart shares. They know what they’re allowed to do and so they will only allow themselves to participate in transactions between known and qualified parties. This is a game changer. This isn’t like your grandma’s shares. These are shares that are actually able to transact internationally and that’s a big deal to get liquidity. So, we’re excited about that. We’re going to give you some progress updates there and a number of other important integrations and offerings that we’re bringing to the market.
Fantastic. Okay. So now that everybody gets what you are and why you are important, give us a little taste of what you’ve been up to in the last six months. I’m sure you’re not doing much.
Well, the last six months have been pretty busy so we’ve rolled out some interesting and important technical capabilities, support for tranches, which is important for companies going through Series A, Series B, different voting rights or issuing shares here in the U.S. and overseas, Reg. D, Reg. S., so that’s an important piece. We’ve introduced ...
Sorry to interrupt. So when you talk about tranches, does that mean that the smart token itself has some trigger built in to understand when a milestone is met or something like that?
So that’s a piece of the way that you do tranches. Another, more importantly, most importantly, not all shares are equal inside of a company.
So, some have different rights.
Some have different handling requirements, etc. So you’re able to have a single company’s shares but with different rules built into them based on the rights of the actual shareholder’s…
Got it. Amazing. That’s so great.
So that’s a cool piece. We’ve supported non-fungible tokens now so we can do not just shares of things but whole title ownership of things and this is opening up the possibility to do all sorts of new financial instruments as a base line. Funds are just really combinations of both of those so there can be shares in funds and then funds themselves have assets which can include rights in other funds so you can build in those behaviors in a generic way and so there’s a bunch of things from a base line set of financial transactions that we’ve built in.
We’ve got a number of important integrations.
So, integrations with Paxos, with Bitgo, for custody solutions.
Paxos we’re really excited about because of their ability to do publicly traded shares and so that’s opening up new possibilities to trade, for example, shares of Apple or IBM in crypto networks. We’ve got an integration through Cascade FinTech that allows us to do credit card transactions and so it makes it, we believe the source of liquidity is convenience.
So, to the extent that you can make this everyday usable and the kinds of payment channels, folks don’t even need to know that they’re working in the crypto space ...
Right, that’s interesting ...
Is where the wide-spread adoption really comes from. We’ve got some great relationships with partners so, you know, Vertalo.
A great working relationship there. We’re supporting the Inventium launch, the big security token launch there. A crowd-funding launch for Indeco, so big and little token offerings.
Yes, so the Inveniam, that’s the real estate of a couple hundred million? Is that right?
$260 million across a few cities right?
That’s right. So there are several offerings built into that one core offer.
Interesting and then what was the second you mentioned, I’m sorry?
Okay, what’s that one?
They are a crowd-funding offering.
The thing about vouching and crowdfunding cap tables is, if you put your cap table on vouching you don’t have to issue a token, but it gives you the option, the ability to issue a token later.
If you’re in this business like we are, you’re here because you believe this is a mega-trend right? So, Vertalo is working to capture the early part of that mega-trend by helping companies raising money to put their cap tables right on blockchain for self-sovereign ownership of the things people are investing in. Connections between issuers and investors. We’re taking this to market now. We’ve got too many clients, too much work, so it’s getting busy and exciting.
And we’ve seen funds that are tokenizing and we’ve also, the holy grail that people are talking about is what’s it going to take to get the institutions in to start investing. Which side are you seeing movement on, or both?
So, we really sit on the infrastructure side, the technology side so it’s really with folks that are institutions that are seeking to build their own infrastructure and to build it within their rules and their compliance requirements.
And that’s one thing that we’re seeing, is people don’t want to follow other people’s rules, they want to follow their own rules.
Especially in crypto, right? I think that’s always been. So what’s a use case for an institution that wants to implement things that you’re doing? What’s the most popular or attractive part of what you’re doing to them?
I think the technology is still very obscure to a lot of major institutions.
If you look broadly in the market, there’s not too many blockchain developers.
There’s not a lot of schools or universities out there that are training developers to code on the blockchain.
And so I think that’s one of the things that we’re seeing is the domain expertise is very interesting to them and so they’re coming to us looking for that type of domain expertise so they can package this infrastructure within their own requirements.
Got it. And what’s that going to help them do better now that they have you baked in?
That’s really hard for me to say. From my perspective, we’re still in the experimentation stage so it’s institutions that seeking to figure out what is valuable about building on the blockchain, you know, why should I build infrastructure on the blockchain. What are the efficiencies that I gain? I do think there are a lot of efficiencies on the compliance side in particular.
One thing that we’ve seen with our own existing clients is that we’ve been able to automate a lot of the compliance requirements when it comes to transferring these assets from one jurisdiction to another.
Yeah, that’s amazing.
Or it’s onboarding investors within this complex web of regulatory requirements.
As we come back to these compliance-aware tokens. The centerpiece of this is the ability to map global securities regulations into the behavior of the tokens.
Global securities regulations are complex. Each jurisdiction has their own particular rules
So you can map these in to the tokens, they can change, and the tokens can adapt to the new rules. That’s important. We’re working with the regulators from two governments to actually show that we can issue private securities with the jurisdictional rules of each of those governments and trade them between the citizens of those two countries. This is showing cross-border trading, de-centralized cross-border trading of restricted securities.
That is a really big deal because, in the end, it’s possible to layer in all of the world’s frameworks, into these same tokens, and allow cross-border trading. Currently, only the very biggest financial institutions are capable of these types of trades because they’re so complex.
This brings it to everybody.
And allows for global liquidity.
Working directly with the regulators is very exciting.
Because they can actually provide their inputs and oversight into this so we know that we have something that they ...
Yeah, yeah. Amazing. So on the tech side, our platform we designed to be very configurable so we literally have a different front door for every country. The fun part is even within those countries, different types of investors have to be treated differently, whether ...
Individuals, institutions, and so those were some of the challenges that we saw but then on the regulatory side, the regulations change per country. So it might be legal to issue a digital asset in a certain country one month and then the next month the government comes out, or the regulators come out and say some negative things about bitcoin or security tokens ...
Oh my gosh.
And so ...
The same place, real time is changing its rules?
Holy lord I didn’t even though of that.
So, we’re finding ourselves having to update these rule sets and these compliance requirements in real time as they change.
Wow. So is that a service that you provide to all of your clients that you’re going to update, you’re going to watch the news and as they evolve their regulations you’re going to bake that into an existing token… or do they, how does that work?
So as a company that helps issuers follow their compliance requirements, we’re definitely very paranoid about putting them out of compliance.
So, when things come into play like GDPR, went into effect in May of 2018, we did get all of our whole platform into compliance with GDPR and get all of our clients, as a result, into compliance at the same time.
It’s just something we do just because it’s our job to make sure that our clients are following their compliance requirements.
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