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.
Hi. This is Amy Wan with Security Token Academy. I’m here with Kinsey Cronin from PrimeTrust. Welcome, Kinsey.
So, 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?
Okay. 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, 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 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 borrowed 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 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 seemed 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, 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 PrimeTrust 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.
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? So, most people do not decide to keep stacks of certificates that claim their ownership of securities in their homes. 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, a business that’s designated for that type of business.
Yeah, of course. Of course. Look. It’s going to have an impact on the entire industry because it is ... 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. I think I probably should’ve mentioned, for your earlier question, one of the reasons that I would expect that more security tokens would be kept with custodians that 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 of 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 STOs and all the issues around custodianship?
I wish. 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 direction, in the same direction that the security token industry is trying to move in, so you start sort of 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.
Fantastic. Thank you so much for joining us.
This is Amy Wan with the Security Token Academy.
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