The Tokenization of Global Assets: An Overview (Expert Panel with tZero and Polymath)

The Tokenization of Global Assets: An Overview (Expert Panel with tZero and Polymath)

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Hey. Everybody it's me Adam chap Nick with the security, token Academy, now welcome back today. We're covering an advanced, topic of security tokens called the tokenization, of, global, assets, now if, you need a refresher on the basics, about security, tokens make sure to check out our video called security, token overview, icos. And stos. This, will provide you the background you. Will need for today's show here. At the security token Academy, we see the security token industry, is really being born in 2018, and having a major impact, on the global financial system we. Think it'll be a fundamental, foundation, of a new financial internet, now. Today I'm here in our Los Angeles studios, and I'll soon be joined by two of the leading experts in the security token industry, to discuss the tokenization, of, global assets but, before we get started we want to take a moment to thank the sponsors, of today's expert, panel discussion, verify. Investor calm and invent this law we appreciate, your continued, support to help. Us further explore the future world of security tokens we welcome Joe Cammarata president, of t0 who joins us from New York and Chris. Hauser co-founder. Of polymath, who joins us from Toronto now. In this first segment we're, going to review how IC OS and even IP o's can use security tokens and in the next segment we'll get into tokenization, of global assets okay. So Chris let's, kick things off with you thanks for being here before. We get to be here yeah good to have you before. We get into the topic of tokenization global, assets what, role do you see security tokens having for IC OS and i POS I. Think. IC o---- is really are going, to start disappearing, and it's really going to start being a lot more of these stos. Or security, token offerings so. The, Wild West was these icy O's that represented, utility. Tokens but going forward rather. Than these self-described. Utility, tokens it'll be a lot of securitized, assets, or, securities, that are offered. On the blockchain rather, than these. Utility, coins that we've seen in the past. Right. Joe there's a concept, that digital, tokens can make the trading process more, efficient, less expensive, also, faster, can. You for everybody explain, what T, three means and the significance, of the T zero name, sure. Adam yeah, there's quite a bit of efficiencies, that could be gained by utilizing, the blockchain and digital, securities in general. First. Off starting with traditional, Wall Street t3. And, now recently in the last I think year or so is gonna have two T plus two, means. It's the trade date plus, three days to settle and now like I said it's two days to settle. And. And in that time we found that there's a lot of expenses, there's a lot of inefficiencies. And, and, might. Even say games that we play between securities. Lending and what goes on in those two or three day periods while securities, are settling. On. The Digital side t0, is, the trade is the settlement so same day we're settling the trade on the blockchain said. It's settling, in near-real-time. And you, avoid the three day settlement, process you don't have cash tied up for three days you. Can't have people naked, short-selling your stock there's, also the ability for the issue or to know who's holding their stock who, their token, holder or in the, traditional, sense shareholders.

Are Instead. Of them holding their securities, at DTCC. Which is centralized clearing in street. Names and they don't know who they're there to their holders are. So. We'll talk some more about some of that later this is very exciting Chris you. Guys had stated that I CEOs, were the past and, stos, were totally, the future what do you what did what do you mean by that, I. Think, you've seen recently, there's been a lot of regulations. And enforcement. Subpoenas, handed out by the SEC, because. There's there's been, a lack of clarity so far about what's. Happening, with these ico is what's happening in the blockchain space. People, are raising, a lot of money billions, of dollars on. White papers alone there's a lack of financial. Disclosure, and I. Think, that's going to end soon and. Traditional. Shares that you see now, shares. And equity funds shares. In VC, funds those, will be coming to the blockchain with, proper, disclosures, and. Yeah. The ICO is are ending and it's. We're. Looking to create a new trend we're compliant, offerings, take place on. The blockchain. So. The. News about you guys is that you're gonna be you are you're going to be compliant, now what makes your company compliant. That differs from other marketplaces. So. Adam, just to start, off where we came from, t0. Was founded from traditional, brokerage my background has been 27, years in fin tech building. Trading systems, and obviously, in. The, regulatory environment with, FINRA and the SEC for, four years. We, already have an existing execution. And routing business called speed route we, do about two-and-a-half percent of the u.s. exchange volumes, on a daily basis, we. Have very high throughput and our clients, our existing, broker, deals and exchanges, we're, one of the only US firms that only deals with broker deals and exchanges, we, don't have retail, or by, side customers, of any kind. So, we're, very familiar, with a regulated space and one. Of the other broker deals we have is called an ATS it's, called the pro securities, ATS, we've. Been operating that also for quite, a few years and one of our challenges was ATS, a--'s are very common, in the US equity, markets we, didn't want to compete with our other broker dealer clients so we started about three years ago doing overnight, trading, we. Bring it up at 8:00 p.m. Eastern and shut it down at 4:00 a.m. to. Issue the first-ever 24:5, u.s. equity trading so. That's what the 80s. Was doing before digital securities, and still is today in fact. We, have two of the three largest online retail, broker dealers trading, through the, 80s overnight, today. Reason. I get into all that is a, regulatory, background. We're. Also integrated, to all the major order. Management systems, Bloomberg, Fidesz SN, C so. We have all the compliance, components, were already in a regulated, environment so it was not a difficult migration. To move over to security tokens so. While I SEOs were coming out in 2017. We. Sat there wondering, when is the SEC gonna step in and realize that these are securities, and they, finally did in June, of 2017. And that's, when t0. Really became noticed because. We have the only ATS or alternative, trading system, that's actually, approved. As an ATS. And traded, digital securities, for which. Was overstock were the first public. Companies that did a digital security offering. That, settled, away from Wall Street entirely, on the blockchain. Got. It okay well now let's talk about icos, that were launched in 2017, that many of these were locked via, Regulation. D which meant that investors, couldn't, sell them for about 12 months and. Soon, many, of these lock ups are gonna be ending during 2018, which is going to allow investors, to sell and trade so. Joe, what does this mean for the, security, token trading, platforms, and exchanges. So. We personally, are very excited, about it in fact we're talking to, a couple of companies one of the challenges, though item that we do have in, looking at these. Some. Of these as you mentioned, that they filed for reg D and they went the right way the, challenges, some of them are having is if they traded, on an, exchange. BitFenix, and some of them had in fact traded, briefly. On an unregulated, exchange, they, may have in fact lost their exemptions, that's one of the challenges that we're, looking at t0 to make sure any company. That we take on to trade through the 80s. Must. Be in strict compliance with, federal securities, laws you, know reg D reg, ass Reggae Reggae plus so. That's one of the challenges we have but. Looking at you, know the coming months in fact our own security token, offering. The. Reg S or the tokens, in general are going to be issued. In. About May we're. Looking at mid to late in May and then, we have 90 days in which the Reg s participants. Can trade those so.

We're Looking in the worst case having our own tokens trading, in August and we're. Hoping to have some participants, potentially, trading in May. Terrific. Okay well we'll keep an eye on that for sure hey so Chris well. We see a number. Of companies appearing, to help with the security tokens for regulated, IC O's or sto than IPOs and how. Will they help do you think that's. Exactly really, what polymath, our platform, is doing because, right now if you want to launch the security token there's. A legal hurdle there's a tech hurdle and there's, a number of steps that need to be taken that's just really. Difficult for a number of these companies to, compliantly. Issue a token, so polymath, what we're doing is we're, really putting all those steps together and we're creating an ecosystem, that. Can get these issuers, especially, through the tech process, to, be able to create a token, that's then only tradable, to, the parties or the authorized investors, that their legal. Counsel has guided them to. Allow. Participate, in their offering and then as well for secondary, trading we're looking at partnering. With companies, like t0, to provide, that additional liquidity for. Those authorized, participants. To then, trade those tokens amongst, each other, so. An another. Party, that's instrumental. In this is the KYC providers, or the identification, partners. That. Make sure the. Users or the investors, are who they say they are and they're allowed to, participate. And transact. With these securities. Just. To add on to Chris. Brings up a very good point there I, think, it's worth noting, in. 2017. When the I SEOs were a, hot, commodity and people are just jumping in because, they were not regulated they were not security tokens people, can invest crypto. Coins, into them a crypto currencies willy-nilly, what, we found when we launched, our security, token in late 2018. Was. That it's a very detailed process and to Chris's point kyc. AML, enhanced. Accreditation, are very important, and it, causes quite a bit of delays you can't raise the same types of you know fifty. Million dollars in hours, or days because. You have all these requirements so. Doing it the right way is a little bit more challenging, but, in full compliance there's, a lot more now, the flip side of that which is again worth noting, is of. The first hundred million dollars we raised about, seventy, percent of it was institutional. Players so. This was a big, change in the market where, I CEOs were not, invested. By any real institutions. In a, security token now that's compliant. And in, I. Guess. Compliance, with the SEC, and FINRA all, of a sudden we had. Institutions. Coming in to play in the space, yeah. That is a really interesting development. So. In Chris. Tokenization, help, liquidity. Of offerings by startups can you help viewers, understand, that. Yeah. Right right now especially. These exempt, offerings, the. Private offerings the ones under reg. D there's. Very very little liquidity, there's, some, OTC, trades that can happen but if you invest in a venture fund you're you're looking at three. To ten years for some sort of exit but, now a tokenization. It. Creates, the, ability for let's. Say an accredited, investor to be able to transact, or get out of that VC, fund a little, earlier and sell to someone else who's interested who missed, the. Initial offering, but they can, participate at a later stage and, I think, that's really what these, tokenized assets, represent, they provide liquidity, for.

For, A lot of, participants. And now, people are able to exit, positions that they want to or get into positions, that they may have initially missed a lot, more easily than in. The traditional model that we see today, right. So, Joe, do, you think we're gonna see more companies that are similar, to polymath, and t0 kind of popping up and working, together and, if you think so how do you think that would work in sort of an ecosystem. Yeah. I mean what we're seeing them already I mean I think between, T 0 and polymath, were kind of the first two our spaces respective, spaces, you. Know we welcome, additional. Companies to come in I mean there's multiple, exchanges, if they're 13 US exchanges and we, know for a fact that many, companies have applied for ATS, is to participate in digital. Securities and security tokens so, we're trying to help build a community we don't mind competitors, in fact we. Welcome it we want to build out a compliant. Marketplace, and avoid, a couple of bad apples ruining. The market for the rest of us so, we welcome it and polymath. Has been great in working with us and trying to create the new. Protocols, and, advancing. From, the traditional ICO and er C 20 protocols, to, the new security token protocols, which, we believe in a change Wall Street and capital, markets in general yeah. I'll, add to that that I agree with Joe there are competitors. If you will but I see it more as collaboration. And for all these parties, to be able to work together to. Really bring this secure. Or tokenized, securities. To. The world and I think it's very important, and there's, ourselves. We can't do it alone t zero I don't think can do it alone so it's gonna require the effort of a number of parties to work hand. In hand with the regulator's to bring this. To. Fruition well. We certainly agree we're excited for lots, more players but especially about you guys so Joe, a few more questions about the security token Training Organisations okay, first. What's. The difference between you, were talking about how ATS, the term with the alternative, trading system what for the viewers is the difference between an, ATS and an exchange. So. In the US markets, in, ATS as an alternative, trading system, an. Exchange, is a, place that buyers. And sellers match them the primary difference, is they both have bids, and offers a. Book. If you will of bids and offers the. Primary difference is in, US regulation, an exchange. Is allowed to display quotes an, ATS, is typically referred to as a dark pool where. They are not allowed to display quotes, or any prices, so. The way they work is you send their order to an ATS if there's a match you get an execution, if there's not you get a rejection, whereas. With an exchange you can see what the price is when you route an order there and the, reason people use ATS, is they, are typically lower cost than in exchange so many firms, including. Speed route in our, smart order router that. We try to intelligently. Look for the dark pools the cheaper execution. Cost before, going to the lit markets or the exchanges, that. Is super. Helpful I know a lot of people didn't understand, that so, second, question Joe still, this. One's very fundamental, but confusing people will hear about the New York Stock Exchange other, groups they talk about crypto, trading but, what they really mean is crypto currency, or Bitcoin. Like trading, which that's, not what we're talking about here today it should be noted as. An aside let me just note that China and other countries banned, crypto currency exchanges, back in September, so, Joe, can you explain the difference in security, token trading the t0 offer and how. That's different from crypto, currency, trading yeah. And I'm glad you brought that up I mean it's something that I try to do every time I, speak to a group is explained. Really I break it down a little bit differently into three buckets and, the first one is crypto currencies, everybody knows, Bitcoin. Ether. Ripple those, are crypto currencies, kind of a more of a foreign exchange type of role then. We get into IC, O's and security tokens I SEOs. And. Security, tokens again are not crypto, currencies, and should not be confused and.

The IC o---- is more of the utility, function which, in the u.s. is proven. To be. Potentially. Problematic for. US. Securities laws so. Security tokens are now kind, of what I believe to be the next generation of utility, tokens are icos. But, regulated. Legal, I SEOs where, we're seeing institutional. And retail investors, coming into play. Right. Now who can use these trading platforms, is it all institutional. Main Street can they come in what about American. Versus, international. So. From the security. Security. Tokens standpoint, right now. Depending. On your offering. For example t0 is done, a reg D 506. C offering which. Requires accredited, investors, these, are private placements, which are typical. Private. Placement requirements for accredited, investors so. They need to be either. Institution or a credit and go through enhanced accreditation, as the. Restriction. May be in reg D 1-year restriction, lists then, general, public, can come in unaccredited, investors could. Come in and trade those after the 1-year old period. Great. So finally, Chris we've been talking about companies, raising money through IC, OS but what about companies, who are doing IPOs, that's a market of about a 36, billion in the u.s. can. Do you see IPOs, using security tokens there should be a total shift. Eventually. I definitely, do see that happening I think the, first movement for, security, tokens well be these exempt. Offerings as Joe was saying like a 506, C or, a 506, B to. Accredited, investors those, types of offerings require less. Documentary, disclosure, but. Eventually once, the, the tools are in place I think some, IPO is. With full-on documentary, disclosure and financials, prospectuses. Will, eventually, come, to the blockchain as well and will see, these. Icos or stos. Eventually. Become public offerings, that may even take over the. Traditional IPO that, we've been seen. For a number, of years and, I, just yeah expand on that for one second, what Chris said is very important, and it's worth noting one.

Of The rules especially regarding, reg D is. If, you get over 2,000 investors you're, required to be a publicly, reporting, company so. Good to expand, on Chris, yeah we are we. In fact certainly. Going to be publicly trading but I believe all stos. Are going to be publicly trading, because of fractional. Shares of the tokens, you're, almost inevitably, always going to wind up with more than 2,000 investors so, they're gonna be regulated, instruments, as. We progress yeah. That's a great point okay. Well thanks this is a great discussion so far gentlemen, now quick, pause today's. Broadcast is, the second, in our expert series of live online discussions. On the new and fast-moving security, token industry if you, missed our first expert panel discussion, on the evolution of IC OS - security token offerings or stos, you, can watch that on our website it's security token academy.com, the. Air you'll also find even more videos and information about security tokens, and if you sign up for our website you can also join the conversation by, adding your comments and questions and receive, our newsletter to find out about new videos and, events from the security token Academy you, can also follow, security, token Academy on medium, telegram. Twitter Facebook and, meetup.com and, make. Sure you subscribe to our YouTube channel we, have a lot of exciting things coming up including the, first ever security, token summit on how, exchanges, and token trading platforms, are taking on Wall Street that, is taking place at the Conrad Hotel in New York City on June 11th, you, won't want to miss out on being part of that important. Conference, it's, bringing together the major players in the security token trading, and exchange industry including, t0, coin, list and start engine plus david, wheeled the former vice chairman of Nasdaq will be a keynote so, stay tuned for more information on speakers, tickets, and more. Okay. Guys now let's move beyond the use of security tokens for IC OS and IP and into an advanced, area called the, tokenization, of global assets now. Chris I know this is really a key interest for polymath can you explain why I really. Think, tokenizing. Assets. Is. What it says. You're, able to now tokenize. Absolutely. Anything if you have a Picasso. Painting. You, can tokenize, portions, of that painting and now people. Around the world can own who. Otherwise couldn't, own a Picasso painting because they don't have enough wealth to do so they. Can now own 1/10 of it or 1/5, of it or 1/100. Of it if, you break it down into, tokenized. Form the. Same can be said for securities, and essentially, anything real estate it. Can all be tokenized and, offer a. Democratic. Or a diverse, asset, holding, for everyone. In the world if you want to own a piece of something provided. Someone's willing to tokenize, the ownership of it it. Allows, a, wide, holding, or a wide base of users that can, have. Ownership or a portion thereof of that particular, asset. Got. It Joe how do you what do you see that the, future tokenization, how's, that gonna benefit, people well. Actually that's how we started, off in the business we, started tokenizing. Assets, about two years ago on the blockchain and it, started, by offering software to a Bermuda, client, of ours, the. Name of the company is PTN private. Transaction, network and, what they were doing was they were taking our software, it, would go out and buy chunks, of private, companies such as Palantir, for example, they, would deposit that with, a custodian. We, would then tokenize, the shares so for example if they bought a million shares of. Palantir. For $8. A share they. Would deposit them we would create digital representations. Of Palantir in. Our trading environment, where accredited investors could come in and register and, start, trading shares. A Palantir which are a private company and fairly. Illiquid well now we've provided, liquidity events, and allowed, them to trade, Wow. When were you doing that, we. Started in July of 2016. Ha. Visionary. I love it so, question. Joe how do you see the security token trading, platforms. Adding value to issuers, and investors in, the area of the tokenization of assets is there some special, benefit. That you guys can provide yeah. There's, quite a bit I mean again another, t0, product, which we're. Not going to get into much today is called DL RS Digital. Locate receipts, it's, a securities, lending product, which, adds a tremendous amount of efficiencies. To, beneficial. Owners such as pension plans and hedge funds where. They have not been getting treated. The best by prime. Brokers in the previous years. That, being said there's, many benefits and what we're finding is issuers, today, when, they do an IPO again, it's, held at DTCC, and street names they don't know who their holders are they've, got the 3 day settlement, cycle they, have naked short sellers, basically.

Betting Against their stock in. More more. Shares than they're actually holding there's. Quite a bit of detriment, to that and the cost I mean listing on a national exchange is very expensive. Whereas, in a security token listing. Fees are drastically. Reduced its full fully transparent. You. Know who your shareholders are it's all in the blockchain you. Don't have the naked short-selling issue, because it's digital shares, they're, not held at DTCC, the, issue is know who their shareholders, are there's, many many benefits in fact we've. Gotten about 2,000. Calls if not more from. Companies, and some of them even public companies that want to delist and issue a security, token yeah wow. That's exciting, Chris it sounded like you said you, concurred yeah I was just agreeing with what Joe said that a number of public. Companies are looking to do exactly that to delist and offer, securitized. Or a tokenized, form of their security, amazing. It's exciting, and I just, want to re-emphasize also, what he said about transparency, I think that's really the. Beauty of the blockchain is everything's, transparent and it prevents, naked short sellers and other. Forms, of bad acting because you. Can see you can monitor everything that's happening in real, time absolutely. Yeah. It's exciting, there's. Other there's, also other options as well I mean at an IPO you're, getting equity the, company gets diluted in security. Tokens what we're finding is that there's new aspects, and new elements that are very interesting. In, and exciting you, know for example the t0 tocut is not a standard, equity offering we're. Providing a, dividend. If you will on, adjusted. Gross revenue, there's, discounts, on products, and services and people, are actually hoping for token, appreciation, so. There's different nuances. That you're afforded as an issuer doing. A security token instead, of a traditional IPO. Yeah. It sounds like this kind of a robust. Community, building, sort. Of element, to it that that is exciting, as well all, right so let's take a look at the major asset, classes we, have real estate globally. Which sits at 229. Trillion dollars we got equity at 70 trillion debts. At about a hundred trillion and Gold is at 7 trillion so, Chris. Looking at these macro, categories. Are some of these more, well suited for tokenization, and, the improved liquidity we're talking about than others. We've. Had a lot of calls lately, about real, estate especially. Real estate investment, trusts that seems to be a primary. First. Mover that's where a lot of the interest is but ultimately. As, I. Said earlier in this interview or this talk that I, think, everything can be tokenized and, it will be tokenized in. The future but, from. What I've been seen early is real, estate might be one of the first movers that starts, to take up, the. Token space and right, now I think the total market cap of all crypto, currencies, or crypto assets is. 350. Million or so if, one. Institutional. Investor starts moving, into the space of security tokens. Gain. Traction I think, that. Market, cap can easily, double. Or triple just by the amount of wealth that institutional. Investors, can start. Bringing. Into the crypto, space yeah, well let's talk about the size, of that real estate class we got real estate assets show, 169. Trillion. Dollars in just residential. And 32. Trillion dollars in commercial, and then they even count 27, trillion in agricultural. Joe. Do you have any thoughts on the tokenization of, one of those residential, versus commercial, or it was do. They have any relative merits, yeah. Absolutely in fact we've also had some of the early, as I mentioned. The private, tokenization, for, private companies earlier, we, also had a lot of interest in not, only real estate. Oil. And gas diamonds. Films, I mean it's really getting out there but in particular to back up what Chris was saying is real. Estate from an institutional, standpoint is similar to what we're seeing in the stos, you. Know small. Retail. Clients, are just you know general accredited investors didn't. Necessarily come, in strong for, security, tokens, it was 70% institutional. They're, gonna be the early adopters, to this to security tokens in general whether, it be. Equities. Or. Real, estate so, I believe that the commercial real estate will, move first and we're already seeing that I have, yet, to see any residential, real estate do, any fractionalization, tokenization. Of. Interest. Yet but, I think it will come eventually. Yeah. Or all my neighbors gonna start owning my house is that what, I'm gonna start doing sounds. I want to sell it yeah right okay. So Chris, you have any thoughts about the, relative value of the real estate before, I move on like. With. Joe and I I, also. Think commercial, real.

Estate Will come first but you're, right maybe if you want to sell your house some. Pieces of it as well, all. Right also Chris since people can already invest, in real estate fund, to REITs what's. The benefit you some we. Were talking a minute ago about how we were seeing movement and reads what's the benefit, of investing via security tokens there I. Think. One, liquidity. And two it provides just a greater class of people that are or. A greater group of people able to invest in that particular REIT. Depending. On the regulations, and the jurisdictions, we'd, like to see it where globally. Anyone can participate in any rate. They'll have to go through an identity and verification, process, but. Now you could have someone in Australia who's. Interested, in the REIT in South America, and participate. That way so it allows people, worldwide, to participate. In offerings. Worldwide, which right, now is a little more difficult than I, think, the blockchain will end up offering, absolutely. Now that's a great point. So now let's take a look at Wall Street and the security tokens Chris. We hear that Wall Street firms are actively exploring the use of blockchain, you hear that all the time arc up our companies like you guys going to collaborate, with Wall Street or will you be more in a more of a competition you think. As. I said before right now we're definitely looking to collaborate with anyone. And everyone and help grow the security, tokens movement. Wall. Street has been I think a little slow to to. Pick up the blockchain but, now they're. Scrambling and they're starting to realize that. The. Blockchain could take over a lot of what their business is I know a. Prominent. Wall Street figure said about six months ago that Bitcoin was a fraud and now. They're, embracing. It so. Yeah we're happy to work with everyone and I think blockchain. Well end up taking over and. Let's. Work at it together yes. Even. Jamie Dimon can change his mind there you go. Hey. Friend, of the show so. Joe, is there a point in time you think when the security, token trading, organizations might, have a material, effect on the business or revenue of all of other 80s is in exchanges, or is everybody to play kind, of in the same sandbox, well. I think, it's there's. A little bit of a conflict, of interest right now I mean as we talk about stos. It's. Really, what, we're doing and you know as we talked about earlier that between the DLR, we're, disrupting securities. Lending we're, disrupting issuance. We're disrupting exchanges. Right. And these are by. Far the most profitable and also, inefficient, areas of Wall Street so, part of the problem that we're seeing is why Wall Street's not adopting this quickly is it's, almost corporate, suicide, to their securities. Lending business they're listing business their investment. Banking business and they're trading, businesses, so, they're kind of in a quagmire where, they can't quite adopt it unless, they're gonna kill off or compete, with their other businesses, it's. Fascinating, so okay, Chris I hear. You guys have some other things in the works what can you tell us about the polymath, venture, fund. It's. It's, in the works we're definitely looking, at creating. A fund that can then participate. In a lot of these security, token offerings and we really, feel that we've, been in this now well I should say the security token space for a year the, blockchain space, for five years for myself and. We. Have a good grasp of what proper. Token economics, are proper, offerings, are and we'd. Really like to create this fund that's able to really, help support the security token Network and participate. In some of these early movers, that. Are looking to tokenize, their security well let's go let's move to a viewer, question, we actually have questions, from the viewers which is exciting David. B asks. How. Do you see tokenization, affecting. The securities, exchanges, especially, the requirements. For BD regulatory. Compliance, in trading. Tracking, reporting, and record-keeping. Gentlemen. Your thoughts maybe start with you Jo what do you think yeah I could take that one it's. Actually something we've been dealing with proactively. That that's a big part of the, regulatory environment so.

When. We first went to FINRA and the SEC back. In 2015. And said hey we'd like to issue, trade. Clear and settle on the blockchain they said what's the blockchain. So. It was a nine-month, Roadshow with, all the regulations Fenner and the SEC. Probably. Many. Many many people many many meetings throughout. The country and finally. They understood it and the reason we got that to. The point of them understanding, was we had a parallel all, the, compliance they wanted to make sure that we were following all the same rules all, the same broker requirements. Compliance. 15 C 35. Recording. Requirements. Custody. And control utilizing. A clearing from the wallet, at the clearing firm so, we've really paralleled, almost. All of the rules and, I think the fundamental. Difference at the end of the day for people to easily understand, is. DTCC. Is Wall, Street's consolidated. Clearing, the, blockchain is Wall Street's. Decentralized. Clearing, or DTC. G is centralized clearing blockchain. Is decentralized clearing. Utilizing. Multiple. Trusted, entities. That's. A great answer okay our next question, comes from another viewer Jenny V she. Asks, what are the benefits of issuing, security, tokens, instead, of traditional securities, if the, issuer has to offer them essentially, same way Christian. Thoughts on that, that's. It goes back to what I was saying before it just allows them to offer their securities, and raise funds from. A wider group of people. Ideally. We'd like to see a world, or regulations. Whereby anyone, can participate in these offerings, given, any. Jurisdiction. So. It. Lets people raise, money from a much wider group of people and also I'll. Add to that, there's. A lot of people who have been in Bitcoin, and blockchain since. Let's say 2011. 2012 and they have a lot of crypto, wealth they're. Not looking necessarily to, convert it to fiat and then, just. Have dollars in their bank out but they are willing to convert. It and diversify. Into other crypto, assets, and crypto, securities, I, think. You we would see an offloading. Of some of the generated. Crypto wealth and have, these. This. Group of people diversify. Into more secure assets, that's. Great also it's, also much easier, it's a much easier process, I mean you think about traditional doing, an IPO and and I'm gonna use us as an example we. Did a security token offering, and we've literally, within. About 60, days raised, almost a hundred million dollars you. You would never be able to do that with a traditional IPO mm-hmm. That's great all, right final, question comes from Brad, Johnson. Who asks, will. It be more common, that investor distributions, will be paid to token holders in the form of more tokens, like an ICO might or the distributions, will be made in fiat currency, and the token simply, instructs, the sponsor, who to send the cash distribution to. Guys. I think. Really what's, what's, great about the blockchain is if a company wants to make a dividend, payment they. Can say dividend, payment is, happening, on July 1st and we'll take a screenshot, or a snapshot of, all. Token, holders prior to that date and then. At. The time of dividend payment everything. Can be paid out proportionately. On the, blockchain and there's no need to interoperate. With banks because it, just happens automatically, and programmatically. On the blockchain which will allow those, types of payments to have and much, more efficiently, and at, a much lower cost and take out a number of middlemen. Great. Well we've survived, the lightning round so let's talk, about a timeline of the security token industry, and what the two of you predict for, the industry moving forward Joe, as you look to 2018 and beyond, you, have any observations or predictions about the security token industry, or the security token trading, organizations in the US yeah. Absolutely we're, finally, starting to see it accelerate, here in fact I'm. Meeting with the SEC next week we've, been invited, to collaborate with them sitting, with about 40 regulators.

In Washington DC to, now finally, start furthering, security, tokens I think, they realize it's happening regardless. Of what they'd like, and. They want to make sure it's done correctly, we're. Seeing a lot more interest, really. In the couple in the previous, couple of weeks and as, I mentioned we're looking, for and I don't know if you saw their recent press release that. We have. Put a prototype, out of our, token, trading system to, let people see it as a video there's a movie or, open. For business we're just waiting for the Reg D guys to free up and be able to trade or our. Own reg, s offering which will be ready by August, so, we're potentially. Looking at a couple may be trading, in May in the, worst case we will start trading our own in August. That's. Exciting, you mentioned reg as do you have any predictions about international. Security token sto, Street security, token trading organizations. Yeah. So that that's something else that we've gotten a lot of interest. From our international, exchanges. And, we're dealing with quite a few already who. Realized. That I SEOs may not have been good but, they could start listing, many international, exchanges are very small and have not had a real. Large. Amount of volumes or issuances, in the, previous years they. Now see this as an opportunity and for. Example we. Have an arrangement or an. Agreement with Colombia, Colombia. Mercantile, exchange Colombia, Stock Exchange where, there's many, many smart. Entrepreneurs, great businesses, that, can't raise capital well, they can now go to the exchange and issue a security, token and get, distribution through the brokers, and just, treat this just like an equity. In their local country. Fantastic. All right Chris your, turn any predictions you want to make about the security token industry, in 2018, or beyond. Definitely. Yeah, I'm optimistic. For sure right now of that. Three hundred and fifty billion dollar market, cap I think. Maybe. Ten million of it is. Self-described. Security, tokens that, we're. Seeing traded, on the blockchain at. Present I think, you will start seeing a lot more security, token offerings coming out, throughout. The rest of 2018, and by. 2019. That, the market cap of securities, verse utilities. Securities. Will start to overtake, utilities, and by 2020. Securities. I think will dwarf utilities, and once, institutions.

Are Involved, it will be, hundreds. Of billions if not into. The trillions, of, value. Of securitized. Assets trading, on the blockchain compared. To a, much. Lower number for, these so-called utility, tokens that were seeing today so, the movement is starting now and it's. Going to grow very fast I think awesome. Now Joe I also had a note to ask you about the comments from t0 this week regarding the trading platform and possible operations in May any. Other quick update that's what you were just referring to right, yeah. As, mentioned we're talking, to a couple of companies about potentially, listing. Their. Reg D and/or reg a plus in, May or June, but. We're waiting on confirmation, of, those great. All right well we're holding our breath it's, exciting, all, right well that's a great discussion I want to thank you so much Joe Cammarata from with. T zero for joining us today from New York and also, thanks to Chris Hauser from polymath, for joining us from Toronto and a, special thanks to our sponsors, of today's show verify, investor, calm and invent this law and thank. You for tuning in as a reminder you can keep up with the security token Academy, on telegram, Twitter Facebook medium. And meetup.com and by subscribing, to our YouTube channel you can also sign up on our website at security, token academy.com, for updates on new videos and, events stay. Tuned for more information about our security token summit on how exchanges, and token trading platforms, are, on Wall Street the, summit's taking place on June 11th at the Conrad in New York City you, want to be there to join David wheel the former vice chairman, of Nasdaq along, with representatives. From t0 coin. List start engine and many others for what is sure to, be a great conference that's, it for today again, thanks to all our guests, and all of you for watching for. Security token Academy, I'm Adam chapter.

2018-04-16 06:37

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Comments:

Awesome show and content, two companies that will set standards for the security tokens. Here's an example of a security token https://propertycoin.re/en/ great to hear we are doing something right. Only not convinced about the STO acronym, don't believe it will replace ICO, just the context and regulation behind ICOs will be changed.

Two comments: about 10 minutes in the t0 guy mentions launching a security token in late 2018. Since that hassn't happened yet, we can assume he meant late 2017. Perhaps an edit is warranted for when the video is viewed next year. Second comment: the host has green reflections on his face. This is a result if incorrect green screen lighting. I'll leave that to you to figure out, but I hope you do figure that out before your productions become regular features. Feel free to delete the post after reading it. It doesn't really need to be public.

So Tzero are trying to stop the average man from investing in startups. Giving all the gains back to VCs.

Our sister channel, ICOinvestor.tv, interviewed Property Coin https://www.youtube.com/watch?v=zelM5Ae5yUM&t=526s

So a question i have is that if I want to trade a security Token of my choice on the tZero platform as a resident of United kingdom for example, how possible is that? Bear in mind, I dont consider myself as an accredited investor

Very peculiar that in your other videos you thank Polymath as your sponsor and all of sudden when speaking about Polymath you don't mention them anymore. Not even saying you have bad intentions, but this kind of stuff surely does not transmit a lot of trust guys.

So where can we buy tzero?

Actually, it's probably more trustworthy that Polymath isn't the sponsor for a video about themselves.

The guy from Toronto actually meant 360billon not million.

Can Reg A+ compliant tokens be traded freely on an exchange between non accredited investors in the manner that crypto-currency is traded now?

Here we go , the small guy has no freaking chance again. The rich get richer, tell me why a hard working man cant invest if he doesn't make 1million a year, screw accreditation. USA is not the land of opportunity

Amen

Also, 430k+ views with only 100 upvotes and 10 comments? They must be running ads for this video, just sayin.

These guys keep saying "The blockchain" as if that is an actual thing.... Which 'blockchain' are they talking about? The Bitcoin blockchain? The Ethereum blockchain? I'm a Polymath investor so I know they run on Ethereum, but they always conveniently leave out the fact that 'blockchain' does not work without a decentralized network of nodes competing with their time/money for an intrinsic asset of value. This creates the incentive for securing 'the blockchain', without BTC or ETH, the blockchain has no security, and without security it cannot become a decentralized immutable ledger with censorship resistance, which is the whole point. The only reason you go through all that trouble is for immutability and censorship resistance, because there is a large trade-off of efficiency/TPS in blockchains to gain those features (which were previously unattainable before blockchain). Without the risk/reward dynamic of nodes competing for the internal asset, the blockchain is worthless and will get hacked. I hope t0 and the banks know that to use a real blockchain, and reap its benefits, they need to embrace cryptocurrency.

You can invest in Polymath though. Be a smart move!

Why not?

Polymath best project !!!!!!

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