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Much of the focus on the blockchain and cryptocurrency markets received in 2017 and 2018 as a decline in the Bitcoin price fell about 75% from its peak. An area within the space that is growing in favor despite the broader negativity is represented by securitized tokens.
In this case, the word securitization refers to the transformation of blockchain tokens into legally compliant securities rather than, as some of us with financial experience, of course, will deduce, a grouping of assets (or tokens) to be sold as securities.
The value of all the shares listed on the stock exchange is of the order of $300 trillion of. This measure does not include privately negotiated securities or other securities, such as bonds (which exceed stocks) and derivatives. Reversing the nomenclature, the tokenizing securities business has the potential to be a big business.
However, one might ask why someone would want their tokenized titles. The logic is what seems to me to be in conflict with many of the married principles in the cryptic community, where libertarian ideas on the elimination of central banks and the diminishing of the role of government in financial markets are pervasive. The logic for the tokenization of titles is to make the titles more self-regulated.
Blockchain technology enables smart contracts that can be used to prevent ordinary investors from buying securitized tokens that they are not qualified to own. They can incorporate compliance with complex international know-your-customer (KYC) and anti-money laundering (AML) rules.
Thus, technology that sometimes seems to have displaced securities regulators could now be used with their blessing to help protect investors through the application of securities laws.
Dan DoneyCredit: Securrency
Dan Doney, 48, is the founder, CEO and CTO of Securrency, a 100-person startup that has already raised over $ 9 million focused on securitized tokens. He joined me for a discussion of his company's work in space. See it in the video player at the top of this article.
Doney is passionate about seeing his technology improve the world. "Securrency's mission is to implement a global and unifying financial services infrastructure that pushes capital formation to the margins of the global economy, reduces the cost of equity participation in capital markets and increases global liquidity" .
Security tokens have the potential to address two problems in securities markets, Doney says.
"Firstly, we substantially reduce the costs of accessing capital markets with efficient and user-friendly automated investment banking services," he says. To be clear, Securency is not an investment bank and does not plan to become one. Instead, it is a technology platform whose customers are investment banks.
"Secondly, we stimulate and significantly improve global liquidity by supporting the financial services infrastructure of the future, acting as a global unifying protocol, focused on compliance, security and universal interoperability".
A key premise of technology is that assets that have traditionally been illiquid could become marketable, as technology addresses the challenges of ownership monitoring even of fractional interests and prevents anyone from having to own the security token.
Matthew Sullivan, founder and CEO of QuantumRE Network, is using the technology in his offer. He soon recognized that he would need what Securency offers but initially had trouble finding someone with the complete set of tools. His company took over Securency for the first time in April 2018.
"Securrency provides a fundamental technological element on the QuantmRE offering, which consists of providing an off-chain validation service that allows us to control the distribution of our asset-backed tokens," says Sullivan. "With Securrency technology, we are able to ascertain the status of KYC and AML of a potential investor, issue securities tokens and track ownership at a fractional level."
He adds, "Security is one of the few technology providers that has implemented a work platform that provides the solutions these new markets need."
A new important area of the securities law is the Crowdfunding regulation of 2016. The Securency is working on a partnership to allow offers at affordable prices according to these new rules that allow the sale of securities to ordinary investors.
Sullivan shared an observation with me. "If we were to redesign the way in which securities transactions are originated and resolved, we would consider the blockchain as the most probable core technology that would be used".
It seems that Securency has done just that.
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Much of the focus on the blockchain and cryptocurrency markets received in 2017 and 2018 as a decline in the Bitcoin price fell about 75% from its peak. An area within the space that is growing in favor despite the broader negativity is represented by securitized tokens.
In this case, the word securitization refers to the transformation of blockchain tokens into legally compliant securities rather than, as some of us with financial experience, of course, will deduce, a grouping of assets (or tokens) to be sold as securities.
The value of all publicly traded shares is of the order of 300 trillion dollars. This measure does not include privately negotiated securities or other securities, such as bonds (which exceed stocks) and derivatives. Reversing the nomenclature, the tokenizing securities business has the potential to be a big business.
However, one might ask why someone would want their tokenized titles. The logic is what seems to me to be in conflict with many of the married principles in the cryptic community, where libertarian ideas on the elimination of central banks and the diminishing of the role of government in financial markets are pervasive. The logic for the tokenization of titles is to make the titles more self-regulated.
Blockchain technology enables smart contracts that can be used to prevent ordinary investors from buying securitized tokens that they are not qualified to own. They can incorporate compliance with complex international know-your-customer (KYC) and anti-money laundering (AML) rules.
Thus, technology that sometimes seems to have displaced securities regulators could now be used with their blessing to help protect investors through the application of securities laws.
Dan DoneyCredit: Securrency
Dan Doney, 48, is the founder, CEO and CTO of Securrency, a 100-person startup that has already raised over $ 9 million focused on securitized tokens. He joined me for a discussion of his company's work in space. See it in the video player at the top of this article.
Doney is passionate about seeing his technology improve the world. "Securrency's mission is to implement a global and unifying financial services infrastructure that pushes capital formation to the margins of the global economy, reduces the cost of equity participation in capital markets and increases global liquidity" .
Security tokens have the potential to address two problems in securities markets, Doney says.
"Firstly, we substantially reduce the costs of accessing capital markets with efficient and user-friendly automated investment banking services," he says. To be clear, Securency is not an investment bank and does not plan to become one. Instead, it is a technology platform whose customers are investment banks.
"Secondly, we stimulate and significantly improve global liquidity by supporting the financial services infrastructure of the future, acting as a global unifying protocol, focused on compliance, security and universal interoperability".
A key premise of technology is that assets that have traditionally been illiquid could become marketable, as technology addresses the challenges of ownership monitoring even of fractional interests and prevents anyone from having to own the security token.
Matthew Sullivan, founder and CEO of QuantumRE Network, is using the technology in his offer. He soon recognized that he would need what Securency offers but initially had trouble finding someone with the complete set of tools. His company took over Securency for the first time in April 2018.
"Securrency provides a fundamental technological element on the QuantmRE offering, which consists of providing an off-chain validation service that allows us to control the distribution of our asset-backed tokens," says Sullivan. "With Securrency technology, we are able to ascertain the status of KYC and AML of a potential investor, issue securities tokens and track ownership at a fractional level."
He adds, "Security is one of the few technology providers that has implemented a work platform that provides the solutions these new markets need."
A new important area of the securities law is the Crowdfunding regulation of 2016. The Securency is working on a partnership to allow offers at affordable prices according to these new rules that allow the sale of securities to ordinary investors.
Sullivan shared an observation with me. "If we were to redesign the way in which securities transactions are originated and resolved, we would consider the blockchain as the most probable core technology that would be used".
It seems that Securency has done just that.
