Building on the blockchain since 2013 - Mason has built custom wallet infrastructure from the ground up, and helped scale BitGo’s multi-signature wallet platform up to $1 Billion in transactions per month. In 2016 he launched the world’s first multi-signature web wallet on the Ethereum platform, Ether.li. While at BitGo he architected and prototyped the cold storage infrastructure for the blockchain launched by the Royal Mint of England.
Tokensoft is a technology platform that enables small businesses, enterprises, and institutions to meet compliance requirements for blockchain-based securities at issuance, distribution and exchange. The TokenSoft platform enables its clients to meet banking, securities and tax requirements in over 50 countries. Current and past clients include Hedera Hashgraph, The Tezos Foundation and Andra Capital.
Hey, everybody. It’s me again, Adam Chapnick with the Security Token Academy and we are here in Los Angeles at CIS 2019, and we are joined by, none other than, friend of the show and gold corporate member TokenSoft, represented by CEO Mason Borda. Mason, thanks for being with us.
Thanks so much for having me.
All right, so for everybody who doesn’t know TokenSoft, even though we had a great interview with you a little while back, why don’t you just sort of give us the quick one-two on what is TokenSoft and why did it come to be?
Yeah. So, well we really came to be because there were issuers out there in the market looking to issue digital assets on the blockchain, and we started the company to help them comply with the applicable regulations, whether it was things like banking, securities, or tax laws. And, we do so either domestically, so we can help them comply with domestic regulations, or comply with regulations in the jurisdictions that they’re offering in. So, our largest client, we’re helping comply in 56 countries with their local regulations. And, we automate things like that. When they go to subsequently issue the digital asset, we also help with the enforcement of the compliance requirements as these tokens transfer on the blockchain as well.
Amazing. Okay. So, now that people kind of get what you’re up to, we’re here among all kinds of crypto know-it-alls, and try-it-alls, and what are you hearing or what are you seeing out in the world that’s interesting to you these days?
Yeah, so I think coming into 2017, there were a lot of startups that were issuing these digital assets. And through 2018, it was sort of a little bit of the same. We also started to see a lot of experimentation with institutionals. And, that’s the one thing that we’re seeing consistent in 2019 is there’s a lot of institutions taking a look at the space, looking at different pieces of infrastructure that they need to stand up to start issuing digital assets on the blockchain. And, there’s a lot of activity in that space that we’re seeing.
Interesting. So, institutions in this space are interesting because they actually are on both sides there. We’ve seen funds that are tokenizing and we’ve also, the kind of 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?
Yeah, so we really sit on the infrastructure side, the technology side. So, it’s really with folks that, or 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? That’s always been. So, what’s a use case for an institution that wants to kind of implement things that you’re doing? What’s the most popular or attractive part of what you’re doing to them?
Yeah. So, 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, right? 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?
Yeah. So, that’s really hard for me to say. From my perspective, we’re still in the experimentation stage, so it’s institutions that are seeking to figure out what is valuable about building on the blockchain. Why should I build infrastructure on the blockchain? What are the efficiencies that I gained? 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.
... where it’s onboarding investors within this complex web of regulatory requirements.
Now, this may be a silly question, but you said you have one case that had 50 different jurisdictions, is that right?
So, does that mean you guys have to take 50 different regulatory sort of regimes and bake different rules for-
... every single one?
Yeah. So, our platform automates that, and so as these-
But, to make it automated, somebody over there had to code every single one of these in.
It was very painful, yes.
I would think it would be. That sounds painful. I’m glad that was you and not me. Wow. So, what sort of hiccups did you guys encounter in trying to make that possible?
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, or institutions. And so, those were some of the challenges that we saw. But then, on the regulatory side, the regulations changed 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 and so-
Oh my gosh. So, the same place, real time, is changing its rules.
Holy Lord, I didn’t even think of that.
Yeah. So, we were 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, how does that work?
So, yeah. 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.
You know, it’s funny, we have spoken to not a few companies that do similar work to what you do, but that has never come up, that there’s this ongoing paranoia you have to embrace in order to keep all of the people that you’ve handled issuances for in compliance when at the whim of the regulators in 50 different countries.
It’s what we have to do, yeah.
Oh my Lord. That’s impressive. So, okay. So, where do you think we’re going with, you’re talking about you guys are seeing movement in institutions, where do you think we’re going in 2019 in terms of adoption from the institutional side?
Yeah. I think the world of securities is very complex. There’s a lot of different licenses you need to do different things. I think the good sign is when it comes to institutions, they already have the regulatory cover to do a lot of these things. They can take a more sandbox approach and start with experiments and then go larger. And so, I think it’s a lot of figuring out what all the pieces are for the institutions to continue to do business as usual, but perhaps augment it with additional products.
Got it. Yeah. Interesting. Well, we always love hearing from you about what you guys are up to, your insights in the space. Thanks for sharing your thoughts about the future here with the everything in security tokens and with TokenSoft.
Yeah. Thanks so much for having me.
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