This week, the World Economic Forum in Davos showcased its innovative side with the From Token Assets to a Token Economy forum. Here, world influencers heard from several blockchain industry leaders. These experts explained in detail how the tokenization of real-world assets has the potential to revolutionize entire markets.

Speaking on the importance of security tokens, Neha Narula, director of the digital currency initiative at MIT explained why token ownership differs from a traditional bank held asset. Importantly, she also touched on how blockchain technology improves overall market integrity through transparency.

Streamline Business Systems – World Economic Forum

During the forum, Narula described how smart contracts can streamline many of the world’s industries and business systems. She explained that smart contracts are a “programmable layer” that enables developers to create “really interesting applications“. In closing, she spoke on the roadblocks to large scale adoption.

Specifically, Narula listed a lack of consumer protections as one of the main factors slowing adoption. Like many other market analysts, she believes that a strong regulatory framework needs to be in place in order for the market to thrive. Notably, Narula sees regulations such as companies providing full disclosure about their firm and exactly what their token represents as the first steps in the right direction.

From Token Assets to a Token Economy – World Economic Forum

Jeremy Allaire, chief executive officer of crypto fintech company Circle, also spoke on the nuances associated with the issuance of security tokens that are fully collateralized. Importantly, he discussed how tokenization can create entirely new markets. These new market opportunities, combined with a global reach, have the potential to spur a wave of new investments. In turn, those funds would provide a new stream of capital for global businesses and markets.

Jeremy Allaire via Twitter – World Economic Forum

Allaire spoke on the many reasons why it was paramount to create capital markets that are both open and allow global participation. Primarily, these new global markets could be far more inclusive than the traditional ones. For example, Allaire described how the current market structure is too limited.  He pointed to the fact that there are only thousands of companies out of millions that participate as proof of the importance of a new approach.

World Economic Forum

The World Economic Forum is a multi-national organization that holds yearly meetings to discuss the most pressing issues facing the world. These events see attendance from some of the most powerful and influential people in the world. In this manner, the forum engages the world’s top leaders in regards to the global, regional and industry agendas at hand.

This year marks the 50th Anniversary of the World Economic Forum. The event was held in Davos, Switzerland. This year’s forum features around 3,000 participants from around the world. Topics ranged from the global economy, climate change, geopolitics, and world health.

Tokenization is Official

The fact that the World Economic Forum featured a session on tokenization and blockchain technology, in general, is a huge nod of approval for the market moving forward. You should expect to see the pace of adoption improve significantly as these influencers return to their homes with this bevy of new information.

The San Francisco-based venture capital firm, Andra Capital raised eyebrows across the market after announcing plans to host its Silicon Valley Coin (SVC) STO in the coming weeks. The funds raised via the STO will go towards the expansion of the company’s Open-Ended Technology Fund. The news demonstrates further security token usage in the US market, as well as, a desire to leverage blockchain technology to improve crowdfunding strategies.

The news officially broke on Jan. 22, 2020 via a company press release. In the release, Andra Capital described the purpose and concept of the Silicon Valley Coin. The firm cited the ability to provide investors higher returns and lower risks over a shorter investment period as one of the main focuses of the project.

Open-Ended Technology Fund

The Open-Ended Technology Fund is unique in many aspects. For one, the fund specifically targets companies in their hyper-growth phase. In this way, fund managers are able to combine a late-stage investment strategy with a perpetual VC structure that incorporates tradeable interests leveraged by the latest technology.

Tezos

Additionally, Andra Capital incorporated world-class service providers into the equation as a way to ensure the success of their project. For example, Andra Capital decided to partner with the Tezos Foundation to make the concept a reality. As such, Andra Capital decided to utilize the Tezos Blockchain for the project.

Tezos was a smart fit for the project because the firm provides Andra Capital access to global investors. Additionally, Tezos utilizes institutional-grade security features. Features such as formal verification streamline the entire investor onboarding process.

Silicon Valley Coin via Homepage

Notably, Tezos utilizes a Proof-of-Stake (PoS) consensus algorithm to secure its blockchain. This style of consensus is far more energy-efficient than traditional Proof-of-Work systems such as the one utilized by Bitcoin. Importantly, Tezos supports secure smart contracts and features a unique live upgrade process. This ability to do live upgrades is ideal for long-term, high-value applications.

TokenSoft

For their part, TokenSoft will provide access to its proprietary tokenization technology. These tasks will include the integration of KYC and AML smart contract protocols. These compliance mechanisms help qualify retail investors. Also, TokenSoft will both issue SVC and host the SVC STO.

Speaking on the new partnerships, Sam Raman, Head of Strategic Partnerships at Andra Capital called his partners “best-in-class providers.” He touched on their past successes and how each firm can provide their unique expertise in digital securities to better the overall project.

Silicon Valley Coin (SVC)

The Silicon Valley Coin (SVC)  is a regulatory compliant, asset-backed, and tradeable security token. Each token represents a unit of interest in the Andra Capital Open-Ended Fund. Investors receive dividends equal to the percentage of tokens they hold in the fund. SVC tokens cannot be traded or transferred without first meeting KYC and AML restrictions.

Silicon Valley Coin (SVC) – A New Token in the Field

Andra Capital definitely did their homework prior to the launch of this project. The firm managed to partner with some of the biggest names in the industry to bring their concept to life. It will be interesting to watch this STO launch considering the amount of positioning each partner holds in the market. For now, the security token sector just got a new VC fund.

The blockchain-based digital asset trading venue SDX continues to have a rough start to the new year. This week, another high-level executive announced their departure from the firm. The news brings the number of executives who left the company in January 2020 up to three. The news demonstrates a realignment and shuffling of SDX’s business plan. Also, it showcases the growing pains associated with these changes

According to company documentation, all of these executives departed from their full-time positions in January. The three individuals to leave are Alex Zinder, an architecture lead at SDX, Ivo Sauter, SDX’s head of clients and products, and Sven Roth, the firm’s chief digital officer. The later of the trio agreed to stay on as an external advisor to SDX.

In a recent interview, Sauter explained the motivation behind his decision to leave. He touched on a number of critical changes made throughout the firm. These changes included a shift from the platform’s original vision. He explained that at first, the platform was to utilize the banking sector as a bridge into the rest of the market.

However, this strategy quickly changed as SDX began to tailor its platform specifically, and solely for use by banks. Sauter described how these changes effected moral and fueled the growing dis-alignment between executives and owners. He explained that originally, the platform was to be much more inclusive. For example, SDX was to enable startups to provide services around its features.

Corporate Culture

Sauter also took a moment to touch on the negative effects this corporate culture had on the project. He explained that, in his opinion, a bit more separation needed to occur between SDX and its mother company, the Swiss stock exchange operator SIX Group. Apparently, these feelings of discourse only grew as the mother company took more and more influence on SDX’s day to day operations.

SDX Office via SIX

Additionally, Sauter explained how the big-company approach also inhibited the company’s ability to save. Large corporations require much more reporting. In turn, this reporting raises operating costs. Additionally, smaller firms have more liberty in terms of flexibility and risk management. In the end, the corporate approach made many of the executives feel as if they had been stifled.

Despite the discrepancies, Sauter stated that he had left on good terms. He went as far as to claim that he was at a point in his career that he had no desire to have his contract renewed. Consequently, SDX chose to not offer a renewal.

Challenges in the Market

As with any major corporate reshuffle, there are going to be individuals that no longer fall in line with the platform’s overall goals. Discussing these challenges, a SIX spokesman touched on the changes and what they mean to the project. They explained that whenever you have a concept built from scratch, there are going to be many ups-and-downs associated with the development. In the end, the firm acknowledged that these changes have begun to add up with the spokesperson stating that the firm has “spent quite a few Swiss francs” on the ordeal.

SDX Moving Forward

From the tone of SDX’s past employees, the company is undergoing some heavy internal changes. As such, there is no way to determine exactly how these personnel changes will affect the overall strategy the company has chosen to follow. One thing is for sure, SDX appears to have made a priority shift towards servicing the banking sector exclusively with its new platform.