Daniel Coheur is the co-founder and Chief Commercial Officer (CCO) of Tokeny Solutions. In this role he can lever the experience of his corporate background, which centered around the global growth of transactional based enterprises. In capital markets (Clearstream Banking owned by Deutsche Boerse), and telecommunication (Syniverse owned by The Carlyle Group). He is a genuine entrepreneur who mentored and funded several start-ups before creating his own investment boutique. Today, Daniel is working with investment banks, funds, assets managers and distributors to educate these actors on the digital era of finance and accelerate their adoption of distributed ledger technology.
Tokeny Solutions allows financial actors operating in private markets to compliantly issue, transfer and manage digital securities using distributed ledger technology, enabling them to improve asset liquidity. Tokeny Solutions is recognized as the leader in its field by KPMG, CB Insights and PwC. They are backed by Euronext, Apex, Inveniam, and K20 Fund.
Could you share with us the genesis story of Tokeny?
The story begins with Luc Falempin, my partner, trying to buy a few shares more than a decade ago, but the high fees and inefficiency prevented him from doing so. His search led him to Bitcoins, which he was able to obtain efficiently and at a low cost.
This experience made him realize how inefficient the current financial markets are, and how blockchain, the underlying technology of Bitcoin, can help bring the same efficiency and low cost to financial instruments like cryptocurrencies.
It was in 2017 that Luc decided to start something to make that a reality, and he approached me with the idea of creating Tokeny. Having worked in traditional finance for decades, I also saw the huge potential of digitizing and automating the financial markets. We then established Tokeny in Luxembourg in October 2017 and started our challenging but remarkable journey.
Tokeny enables adding a level of permissioning to tokens, why is this important to what are generally viewed as permissionless assets?
Permissionless tokens can be held by anyone, and the only link between the tokens and the holders is the wallet. Issuers cannot comply with regulations or guarantee ownership of tokens, as anyone who knows the private key of the associated wallets can view and transfer the tokens. So who is the token holder?
Security issuers need compliance, permissionless tokens are definitely not an option. They have to identify token holders, not wallets, and ensure only eligible investors can hold these tokens. This can only be achieved by issuing permissioned tokens to embed compliance rules into the token.
For example, ERC3643, the market standard for permissioned tokens, leverages the digital identity system ONCHAINID to link tokens with the digital identity of the holders. As a result, not only can issuers identify their token holders to enforce compliance, but token holders can request recovery of their tokens by proving their digital identity if wallets are lost to guarantee asset ownership.
Can you describe how Tokeny provides a platform for digital onboarding for issuing digital securities?
Earlier this year, we introduced LEGO-like onboarding solutions for our customers with Qualification and Subscription modules to allow issuers to digitally onboard investors in an easier, faster and more flexible way. Both API solutions and no-code platforms are available for issuers to customize their processes and workflows based on their needs.
Tokeny has recently leveraged an open-source protocol from Ethereum called the ERC 734 and ERC 735, and this was rebranded to ONCHAINID, what is this specifically?
ONCHAINID is indeed based on ERC 734 and ERC 735. It has been modified, improved and enriched to become a complete decentralized identity (DID) system. The suite of needed smart contracts is automatically deployed and given to their owner, they are connected by default with an identity service, but ID owners can change and manage their keys. Also, a full API to manage these smart contracts has been built to facilitate connections with ID oracle and front-ends, and web interfaces have been made available for ID owners.
The ONCHAINID protocol allows users to create their self-sovereign identity on the blockchain. Their private data is kept off-chain with trusted parties, encrypted identity proofs of data validation are published on the blockchain.
Users within the protocol are able to accurately verify their counterparties while keeping anonymity. With this protocol, personal data and credentials are controlled by the owner. The owners have full ownership and cognizance of who they interact with on Web3, and where their data is received.
Tokeny has been working on bridging the traditional world of finance with blockchain, how long do you think it will be before legacy financial companies transition completely to this technology?
The transition is already happening among the big players, and we have recently signed several more deals with large companies, with many more in the pipeline. In August, we announced that Fireblocks integrated our solutions into their platform to provide a turnkey tokenization solution. They provide solutions for more than 1400 financial institutions, the integration will definitely accelerate the adoption of asset tokenization.
What’s your long-term vision for Tokeny?
Our long-term vision is to make finance transparent, interoperable and efficient. Tokenization is only the first step, the full potential of tokenized securities lies beyond tokenization. Our role is to act as a technology enabler to make tokenization solutions and DeFi services accessible in a compliant and secure manner, allowing issuers and users to reap the benefits of blockchain technology without any technical hurdles.
You’ll be participating in a panel discussion at the Digital Assets Week Singapore Conference on September 27th and 28, 2022. Can you briefly touch on what you will be discussing?
I will be joining the panel ‘Institutional Access to Private Market Assets’ to talk about what is the status quo in traditional private markets that limits access to large investors and how tokenization can help solve these problems. Among all the challenges, the lack of liquidity makes private assets less attractive to institutional investors. Tokenization is the solution to this issue, as tokenized assets automate compliance, enabling immediate transferability. In addition, tokenized assets are interoperable, allowing these digital forms of assets to connect to several trading venues, unlocking the liquidity of the assets.
However, a market standard such as ERC3643 is required for this to be achieved. It also paves the way for more innovative use cases, for example, collateralization in DeFi. Ultimately, a user-friendly experience is critical to make tokenized assets accessible for both large and small investors, with technology providers playing a crucial role in hiding blockchain technology from users by providing easy-to-use interfaces so that users don’t even realize it is there.
Is there anything else that you would like to share about Tokeny or your upcoming panel discussion?
The industry players need to collaborate together as a complete ecosystem is needed to ensure that institutional participants can begin their tokenization journey with everything they need, from custodial wallet providers and tokenization solution providers, to valuation vendors and distributors, and more.