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, I’m Adam Chapnick with the Security Token Academy. Today, we’re pleased to bring you a corporate member interview with Prime Trust. The company is a gold corporate member of the Security Token Academy. Prime Trust is an SEC-qualified custodian for security tokens issued using the ERC-20 standard. In addition, Prime trust compliance services include KYC, AML, and bad actor checks.
In this corporate member interview, we’ll be speaking with Kinsey Cronin, senior vice president of business development at Prime Trust. Kinsey actually joins me right now in the studio. It’s great to have you here today.
Great to be here.
So first of all, can you tell our viewers just kind of about what Prime Trust is, why it was created?
Sure. So Prime Trust, it is a trust company and a technology services company. We were created back in 2012, as sort of a response to the JOBS Act that was just coming out. The company at the time was called FundAmerica, and the purpose was to provide escrow services to companies that were offering equity crowdfunding. So allowing for accredited or non-accredited investors to come online and make investments in startups, essentially, or existing companies.
So that escrow service slowly grew over time. Eventually, we had customers asking us, “Can you accept Bitcoin and other types of crypto payments?” And then we also had come customers asking us, “Can you do investment services, like creating IRAs, or college saving funds for our customers, our investors?” And in order to do that, we formed a trust, Prime Trust. Eventually, Prime Trust grew so much bigger than FundAmerica that it acquired FundAmerica, and now what we’re able to offer is this really amazing, very unique hybrid of trust services that fulfill a lot of traditional trust service offerings, and then also technology that allows for integrated APIs, so that our customers can offer our services through their platform.
Right. That’s a lot. So it’s been fun to watch, especially your company in our space, because it does come kind of out of the early days of the equity crowd funding, and we’ve had Scott on several times, and he’s one of the leading, kind of thought leaders in the space. It’s really been interesting to watch you guys morph and grow into what you are today. So let’s unpack some of what you just shared. I know compliance, that’s a big part of what you guys do. Why don’t you talk a little bit about how that’s done. How do you tackle compliance?
So as you know, compliance requires for every individual or entity that comes through the system and makes a deposit, or offers the sale of securities, to go through a know your customer, anti-money laundering, in the case of issuers, bad actor checks. So that means we have to collect information about each individual or entity, so that we can run a know your customer check, and make sure that they are who they say they are, and then we also need to take that same information and run it through a number of international watch lists, to make sure that there’s no reason to expect that this individual might be money laundering.
So our team, it’s an amazing team of compliance officers that are all based out of our offices in Summerlin, Nevada, and they handle it. So we have automated some of the process so that it’s really quick, especially for users that are coming from the US, the UK, or Canada, but there’s still a definitely kind of constant high touch sort of experience there on the compliance side, which is really valuable to our customers, because it means that they don’t have to do it.
Definitely. Yeah, and that so many other parts of this process are daunting in how much paper used to be shuffled, and head space has been taken up to do all of the work that you guys are now tackling. I know you mentioned automation. Can you explain, first of all, maybe what API technology even is, and how you guys use it to do some of the things that you do?
Sure, sure. So the API tech actually doesn’t really have anything to do with the automation, that’s really on our side, but what the APIs allow for is for our end customers... So our end customers are using our primary customers, those are maybe a website that is an ATS, or an exchange, or a crowdfunding platform. So the end customers, the investor, or account holder, they are able to open an account, deposit assets, make an investment, all from the platform of our customer. They’re not coming to Prime Trust. And the reason that’s possible is because the APIs allow for the integration of the two systems. So it’s obviously limited, it’s carefully managed on both sides, but it means that a user can be creating a Prime Trust account and making a deposit into it, using an interface that isn’t Prime Trust.
Got it. That’s super useful, and that sort of disintermediates a lot of people that used to have to be involved. It’s fantastic.
So tell us about Prime Pay. What is Prime Pay? That’s something you guys have developed.
Sure. So Prime Pay is what we call our funds processing services. So we’ve always been able to offer wire, ACH, and credit card processing. On the crypto side, being able to offer credit card processing is a little bit new. So we call it Prime Pay because basically, it is the way that a user can get funds into the system. We’re really excited actually, because we have a widget that we have in the works. It’s probably coming out Q1 of next year, and that will allow for much easier integration of specifically, Prime Pay.
Got it. So for people who might not know the terminology, what, in your lexicon, is a widget and who uses it?
Okay. So widgets, they are very easy to use, very easy to integrate function systems, right? So basically, instead of doing a whole backend integration with the APIs, which require engineers to build in both systems and do that integration, so engineers on our side and engineers on the customer side both have to work together to build a system, which is amazing, because it’s customizable and it can do so many things, but a widget is a lot faster, and it usually does one thing really well, so that the customer team can integrate it maybe in a day or a week. It’s really quick, it’s very simple, it’s straightforward. It’s not customizable, but it does achieve the function. So we’ve identified some key functions that are really important, pretty much to all of our customers, and we’ve turned or we are turning them into widgets, so that those customers can get up and running quickly.
Got it. So who would be a key user the Prime Pay widget, for example?
Well, one key user might be a company that is looking to allow for crypto deposits or crypto payments, and that’s all they need. They simply need a credit card to be able to be run, so that the fiat can be converted to a cryptocurrency, and then the cryptocurrency can live on that site and be used.
And boom, they put the widget on their site, it goes through you guys, it looks like it goes through them, and...
Bob’s your uncle.
Exactly. Bob’s your uncle.
Great. Okay. So tell me about the Prime Settlement Network. What is that, and why is that important?
Okay. The Prime Settlement Network is basically the way that we can create near instant settlement between anybody that’s integrated on the Prime Trust platform, so any of our customers and any of our account holders. So what it means is that if I have an account at Prime Trust and you have one at Prime Trust, and we want to make a trade or a funds transfer, we can do that very quickly through the Prime Settlement Network. The network is really important to OTC desks and exchanges, anybody that’s trading, it’s really incredible to be able to have that instant settlement.
Mm-hmm (affirmative) So this network, would it exist behind the scenes? Would a user see it in the front end? How does it appear in the life cycle of a customer?
So for an end customer, so an investor at home on the internet, they’re probably not going to see it, unless they are doing sort of higher level trading. It’s really more on the back end. It’s a way that our company customers that are offering these services to more end users, that they can offer liquidity and access liquidity from one another.
Got it. Everybody loves liquidity.
So check, that’s great.
So what are some other ways that Prime Trust is offering to help clients grow? You have kind of different client sets, and what are some things that you guys are doing for them?
Well, you’re right, we do have different client sets. We have the escrow services sets, we have the exchanges, and the wallet providers. We have new types of companies that come every day-
It’s a lot, yeah.
-That basically say, “We have this problem that needs to be solved. We want our services to be compliant, we want to follow US regulations, and we also need them to be seamless and easy, and work for our customers. There’s not a lot out there, can you help us?” So we got really interesting problems coming in all the time.
Yeah. And what we tend to do is when we start seeing the same problem or the same question, the same requests coming in from multiple customers, especially when each one of them has a lot of volume that they’re trying to do, we realize, okay, this seems like a priority. This is becoming important. And if we can provide this new service to our customers, it’s going to help a lot of them and they’re going to be able to do a lot more. So that happens all the time. We’re just constantly building, and constantly having to let everybody know about the updates.
Yeah. So do you have a system that you use to prioritize internally? Do you have points? Do people get a little sticky note that they say, “I heard this from 35 people, I heard it from 36 people?”
It would be great if we had something like that. No, it’s more discussion-based.
It’s discussion-based. It is based on what potential we can see. We have a lot of really smart people working at the company, so there’s a lot of different ideas coming from different directions. We’re still, we’re growing, we’ve grown significantly, especially over the past year, but we’re still nimble enough that we’re able to make changes. Not quite as nimble as when it was a tiny company in the equity crowdfunding space, but we are able to sort of take in information, and we are moving as quickly as we can to try to serve our customers. And it’s interesting as well, because the landscape itself is changing all the time, so the industry is changing.
Yeah, for sure.
So we have to keep that in mind as well. So if customers are asking for something today that might seem like it’s a trend that’s going to end, by the time we have something built, what if that trend is ended? So we have to think about that as well.
You have to bring that bad news to the customer saying,” I hear what you want, but that trend’s going to end,” sometimes.
Well, we wouldn’t say that, we wouldn’t tell them that. We aren’t able to predict the future that well, but sometimes we do have to say, “Hey, this is on our roadmap, but it’s not going to be happening tomorrow.”
Yeah. Got it. So a lot different companies in the space that do different things, are concerned specifically, kind of micro, about their blockchain. They do stuff here, they don’t do it there, yours is no good, mine’s great. Do you guys support only ERC-20 or do you support a bunch of blockchains? Ethereum only, other blockchains?
Well, of course we also custody Bitcoin.
And there are a number of other blockchains that we can work with in limited capacity, and the good thing about Ethereum and ERC-20 compliance is that most new tokens are coming out that way, especially in the security space, and there are just so many of them that we can cover a lot, just by covering ERC-20 compliant. That said, we do get requests all the time for new protocols, and we take them all seriously. So there are, as I said, there’s a few that we can, just because of the way our systems work, we can custody, and then as requests come in and there’s volume and promise, we’re always willing to consider custodying a new protocol.
Right. Nimble, as you said.
So you mentioned that the industry, the security token industry, which is what we are focused on, you were talking about how much it’s evolved and it’s always changing. Where do you think it’s headed?
I haven’t changed my mind about where it’s headed, right? So to me, I think there are a lot of people who agree, the securities industry isn’t going to change in every way, right? It’s not going to be taken over or replaced. I think a lot of these backend systems are going to be replaced. It’s going to be a way of cutting out middlemen, and a way of making things faster and more secure.
So I do see tokenization taking over as a means as a way of holding securities or representing them, the same way that the book entry digital system took over actual pieces of paper, right? So I see that being the end direction. There’s a lot of incredible ideas out there. I think that they can’t all win, and I do think that the system we end up with won’t look that different to the sort of, average person, from the system we have now. It’ll just be running on a different computer system, basically.
Interesting. So you’re of the mind that the big sea change is going to be under the hood.
Yeah. That’s interesting, because I agree with you. So do you see any... I always love asking this, any trends? Because you guys get to see things that actually are happening, whereas we get to kind of talk about what we think, but you’re in it. Do you see any tokenization trends that are actually having any interesting kinds of assets that are tokenizing, or even not interesting that are trending, where more people are using it than others?
I see a lot happening in real estate, and I think real estate, just in what we do, we do so much in real estate. I think it has made real estate, which many people think of as a great investment, more accessible to more people, because when you can split that up more easily and you can offer smaller pieces to more people, and that’s tracked properly and can be traded, and there’s liquidity there, I think that is definitely a trend that we’re seeing. As far as other trends, just generally related to tokenization, I would say there isn’t a trend. Everybody has their own idea, so you never know which one is going to win out.
So what sectors do you think could benefit from tokenization? Not knowing what’s going to work out, but is there anything that you’ve been thinking, “Gee, that’s an interesting possibility?”
Well right now, we’re seeing a lot of interest from the sort of more difficult to bank industries. So adult, and cannabis, those industries, they’re looking for more solutions, so I think they’re probably likely to lead the way in some cases, because they have fewer options, they’re used to paying a lot in fees. So if they can find better solutions for their own banking and security services, they’re going to be more open to them early.
Interesting. Yeah, absolutely. So you mentioned, you kind of touched into regulations there. What do you think about the SEC side of the regulations? Is that a too harsh or not enough? Is it just about kind of right, or is it... ?
Yeah, I mean I think they’re doing a good job. I mean, right now there’s a lot of distractions going on in our government, so it would be great if there was more time spent on this. Obviously, I have a vested interest in there being more development, but I do think that I appreciate the way that the SEC has approached this. I think that it is open-minded, and that it is absolutely considerate of the risks. And I do think sometimes people who are frustrated with the government not moving faster on this, are just not thinking about the level of responsibility that the government has, because at the end of the day, if a lot of people are getting scammed, there are going to be breadlines, and that’s a reality that isn’t necessarily your problem if you’re the startup entrepreneur, but it is the regulator’s problem.
Yeah. That’s well put, the bread lines. So back to you guys. Do you have any specific news, product announcements that are coming up that you want to share with the viewers?
Let’s see. Specific news, so we are really excited that our partner, Binance America, they reached over one billion in USD settlement on our system.
I saw that, yeah.
That’s only in a couple of months, they launched this fall. So that’s really exciting because for us, it really validates our ability to process that volume, and we have had no problem with being able to handle that, and it’s also just very exciting for the industry as a whole, the direction that it’s moving in.
Products that we’re coming up with, as I mentioned, we do have some widgets coming up. We have a number of different things that we are working on. Even recently, this one’s a bit, I guess on the dry side, but we did make a major enhancement to our API integration. So we created some iFrames, which are similar to the widgets that I talked about, that basically make it much easier and faster for our customers to make that integration happen. So instead of needing to do the entire integration in a custom manner, there’s a bunch of different iFrames that they can use now, so they can get up and running, and then they can work on further customization later.
Yeah. So an iFrame is basically like a site within a site, almost, the experience, right?
Yes, although it can be embedded so that it is seamless, so that it doesn’t feel like a site within a site.
Yeah, fantastic. So what about goals, as you finish out 2019 looking into 2020, what do you guys see coming up?
It’s hard to imagine a whole year. The amount of things that change.
I think getting our customers to be able to get up and running faster, being able to solve some of these big problems, being able to help more within the settlement network, offering liquidity, internal liquidity. So basically making it so that our customers, this actually might even come up before the end of the year, but basically so that our customers don’t necessarily have to make partnerships from one another, they can have central liquidity that comes from us. So that all sort of is the same thing, which is making things more plug and play, so making things as plug and play as possible.
Terrific, terrific. So big, writ large predictions. If you had to take out the crystal ball, and you looked ahead for the whole industry, any big thoughts about what’s coming? We always ask people to look into the crystal ball.
Things that have been predicted in the past have been Pokemon cards will be fractionalized, things like that. I like to just goose your imagination with those kinds of thoughts. Where do you think we’re going in the security token industry?
Do you have a crystal ball for me to use?
Oh, we don’t.
Okay, okay. So I just have to imagine a crystal ball.
It’s at the cleaner.
Okay. I would agree about things like Pokemon cards, maybe not those specifically, but certainly trading cards and other digital, I guess, art assets.
Yeah. I also see just more of that sort of, under the hood work happening, especially in the next year. I think there’s a lot of fun and interesting things that are consumer facing, but those things don’t always... they bring attention and they bring investment, and they help the system grow, but I do think that from my perspective, much of this growth is going to be happening in a way that most consumers aren’t seeing, but it is going to be happening by leaps and bounds in 2020.
Very exciting. Well, Kinsey Cronin, senior vice president of business development at Prime Trust, it was great speaking with you today. We wish you and the entire Prime Trust the very best of luck.
Prime Trust is a gold corporate member of the Security Token Academy. To learn more, go to our website, securitytokenacademy.com, click on the directory tab, and then select corporate member. From everyone here at the Security Token Academy, I’m Adam Chapnick. Thanks so much for watching.
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