Dave serves as Chief Investment Officer of NEM Group and Managing Director of NEM Ventures, where his role encompasses group investment management, jurisdictional analysis, partnership building and corporate structure design. 

Dave has 15 years experience consulting to various sizes of organisations, government agencies and NGOs on technology projects, and was an early adopter and programme lead for public cloud projects, having led multiple large organisations through their adoption programmes.

When did you first become involved with cryptocurrency and/or digital securities?

I first became interested in blockchain and crypto a few years ago, but professionally became involved back in 2016 as I was part of a project that was looking to create a parallel settlement system for energy consumption. That project was also looking at a security token raise, and we went through the process of beginning to launch an STO when the company was acquired. As a result, my involvement with blockchain, crypto and digital securities were largely in parallel.

Could you begin by explaining what the NEM blockchain is and how it differentiates itself from other public blockchains?

NEM is a modified Proof-of-Stake (PoS) blockchain that is written from scratch and version 1, which we refer to as NIS1, has been running on the public chain since 2015. At the time, NIS1 was one of the earlier PoS chains, as well as one of the first to support on-chain multi-signature. NEM NIS1 has been leveraged for use cases ranging from tracing luxury goods, supply chain tracking, social media, stem cell research and most recently for a Central Bank Digital Currency (CBDC) in Lithuania. We differentiate ourselves by being one of the older chains, having had no down time, no lost assets, no protocol level hacks and by fostering a friendly developer experience and community. The chain has easy to use Software Development Kits (SDKs) that provide enterprise developers with a familiar development experience. At a practical level, this means that the time to go to market for most companies is quicker because there is very little proprietary content to absorb.

Can you describe NEM Ventures and the type of investments that are generally made?

As the venture capital arm, NEM Ventures invests in companies that build on NEM technology or expand the NEM ecosystem and/or platforms in some way. These investments are made on behalf of the NEM ecosystem and community. We tend to focus on investments in very early stage projects through to series A rounds, with a mixture of companies building directly on the technology, using it in innovative ways or as a partner to the ecosystem generally. We do require the companies to have a genuine commercial plan and a likelihood to reach financial self reliance, however it is not our only measure of a proposal.

One of NEM’s newest products is Symbol, a hybrid blockchain, built specifically with enterprises in mind. Can you elaborate on what Symbol is and why enterprises should pay attention?

The developers built our current public chain (NIS1) from scratch and it has been running for 5.5 years with a cutting-edge feature set. The team took the learnings from that process, advancements in the industry and feature set ideas, and combined them all to develop our second chain, Symbol. Symbol is a new chain, built from scratch to be secure, scalable, decentralized and usable for a variety of purposes.

The technology can be deployed as a private or public chain, and allows protocol level cross chain swaps between both public and private, but also to Ethereum (ETH) and Bitcoin (BTC) via a specific transaction type. The chain supports on chain multi sig (multi level), templatized smart contracts such as aggregate and bonded transactions, it has built in namespace capabilities to allow aliasing of tokens and accounts with user friendly names. It also has protocol level support for security tokens via a combination of account and token based restriction, delegatable roles for token management and account based metadata.

Symbol is attractive from an enterprise point of view because it is possible to simultaneously maintain private and some public uses of the technology, while using a solution that is designed to support that model. It was also created by a team that wrote the chain from scratch and has experience doing so from a battle tested product which is over 5 years old. The fact that NEM is established in the space makes it easier to move the conversation with enterprises from whether Symbol is robust and reliable to how they can leverage the open source technology for their own commercial purposes. At the same time, our open source product and community also benefit in a symbiotic manner. This is a unique value proposition and there are relatively few competitors in the enterprise blockchain space that tick all these boxes.

The first security tokens to launch on the Symbol blockchain is for the Bourbon Fund. Could you quickly walk us through what this fund is?

The Kentucky Whiskey Digital Fund is essentially ownership of a production run of fine Kentucky Bourbon whisky which has tended to appreciate in value over time. The fund democratizes the ownership to multiple parties via a digital asset (security token), which will be built on Symbol. The fund will buy a number of barrels of production, store, maintain and trade those barrels until the point of bottling and sale, which can be expected to be higher than the cost to purchase the production, then bottle and sell the product and return the gains.

This niche market is typically only open to large investors due to the production run size and value, as well as the storage cost and time. It is also a very illiquid market, ironically given the subject matter. It is not possible to hold a fractional ownership of less than a barrel generally, and also not possible to trade that until maturation time. As a result, this fund offers a big opportunity for investors and whiskey enthusiasts alike.

One newly launched product is the LBCOIN which is hailed as the world’s first blockchain-based digital collector coin. Could you elaborate on this project?

The LBCoin project is from the Lithuanian Central Bank and was developed by SuperHow? and  built on NEM NIS1. It is a commemoration of the independence of Lithuania and represents a significant first step towards a Central Bank Digital Currency (CBDC).

The basic concept is that the bank is issuing a collectable coin which will be issued and tradeable on chain. The first phase is the issuance of a set of collectable tokens on our current public chain. Interested parties will have some time to collect a full set by trading them and when they have the full set, they can claim a collectible coin.

One of the new services which will be offered is NEM Ignite which is an incubator-type program. Could you discuss what we should be expecting from this?

Our team has found that there are a lot of great ideas in the blockchain space, but sometimes they are not quite developed to the point of being investable. Certain projects have the potential to become commercially viable, but they need a bit of support and coaching to get there, similar to incubators in other industries. NEM Ignite is our answer to that – we make a small financial investment and commit time from various people and partners in the ecosystem to coach these projects through the early startup stages, helping them to prepare for their initial investment rounds.

NEM Ignite was announced back in March 2020, and at the time we had expected to be opening a cohort around now. However, with Covid and the related economic and investment environment, we have not launched as quickly as expected. A lot of our focus is on the successful launch of Symbol and commitments surrounding its development. We are currently incubating a beta cohort of one project, which we are very excited about and expect to announce in the coming weeks. We expect to re-open NEM Ignite more widely as the economy gets back on an even keel.

What do you see as the biggest impediment to the growth of digital securities?

I see this as two fold:

• Regulation – Regulations are at different stages across jurisdictions, and in some cases are unclear. While broadly speaking it is moving in the right direction, it moves slowly as is always the case. Regulations were written originally for different technological approaches, and need updating over time to allow for things like cross border listings and trade, or access by retail investors who can be custodians of digital assets. Overall, regulation is a major player in the growth of the digital assets space, and will prove to be instrumental in the months and years to come.
• Infrastructure – The knock on effect of the regulatory hurdles mean that we are in the nascent stages of digital securities infrastructure. We don’t have common international standards between regulated exchanges and custodians, for example, we don’t have standardised AML/KYC approaches. This lack of common infrastructure will be solved and we are already seeing the start of some progress, but this currently remains an impediment to growth.

Is there anything else that you would like to share about NEM or NEM Ventures?

I’d recommend following us on Twitter and LinkedIn to stay up to date on all our announcements coming down the pipeline. The lead up to the launch of Symbol represents an exciting time for the NEM ecosystem, and now more than ever we welcome anyone to reach out and get involved!

Hirander Misra is the Chairman and CEO of GMEX Group (GMEX), offering innovative solutions for the creation & operation of electronic exchanges and post trade infrastructure in securities, FX, derivatives, commodities, crypto & digital assets.

He is also Chairman of SECDEX, the Seychelles based Securities, Commodities and Derivatives Exchange, which is a full ecosystem for digital and traditional assets enabled by blockchain technology.

Can you start by sharing what GMEX Group is?

GMEX Group (“GMEX”) is a global provider of innovative multi-asset exchange trading and post trade business solutions and technology ecosystems. As a market infrastructure vendor, we focus on technology and interconnectivity. Our solutions address the end to end regulatory and contract environment needs for issuance, trading, clearing and settlement of securities across exchanges, across all asset classes including traditional, alternative and digital assets, digital currencies as well as hybrid digital securitisation of traditional assets including derivatives.

GMEX’s focus is on digitally transforming global financial markets, enabling participants to launch new solutions, expand current operations and scale to meet market demands. We carry this out using two proven engagement mechanisms to enable our clients to use technology to achieve their commercial goals:

• Market Advancement Programme (MAP), which delivers multi-asset Exchange and Post-trade enablement with an optimal combination of traditional and digital market infrastructure technology and services
• Partnership-driven Approach, we do not just sell technology, rather we use a combination of FinTech, business and investment solutions empowering partnerships and ventures.

What sparked your interest initially in launching GMEX?

When we started out in 2012, the existing market infrastructure vendors were very much of the customer-supplier mindset, providing legacy technology at inflated prices without taking into account the real business and operational needs, including any commercial constraints which may exist. This was our opportunity to differentiate ourselves!

We provide business expertise, the latest technology, connectivity & operational expertise delivered through an aligned partnership driven approach for exchanges, trading venues, clearing houses, depositories, registries and warehouse receipt platforms. In many cases this also allows us to align interests by taking equity in the ventures we are working with, as and where such opportunities make sense.

In 2016 we were able to capitalise on the opportunities that blockchain presented, initially on provenance of commodities and subsequently within capital markets. We were surprised at how most projects just harnessed the technology in the same way that traditional technology was being used and thought, what is the point? That spurred us on to look at ways in which the technology could be leveraged to revolutionise and democratise the way capital markets and marketplaces for other asset classes operated.

Can you tell us about GMEX Investments, and what type of investments are made?

The investment focus for GMEX is early stage equity and token strategic investment in market infrastructure and related FinTech companies, which are synergistic with what GMEX does in terms of servicing and product capabilities. In addition, we also venture build our own initiatives.

Given the interesting pre Series-A FinTech opportunities we are coming across, we have also launched Digital Investment Fund PCC (“DIF”) in the Seychelles, which is the is the world’s first fully regulated tokenised hybrid fund. We have an interest in companies, which have genuine intellectual property in the blockchain and artificial Intelligence (“AI”) space within financial services, combined with early client traction.

Can you elaborate on the digital exchange trading and post trade technology offered by GMEX Technologies?

GMEX offers the first truly hybrid exchange and post trade ecosystem, Fusion, bridging the gap between traditional and digital assets underpinned by regulatory frameworks. This is quite analogous to interconnected telecommunications networks. We ensure our solutions are aligned with the business objectives of our clients and partners.  GMEX Fusion is a hybrid centralised & blockchain distributed ledger technology suite and middleware, which is deployed and trusted by multiple international regulated financial institutions around the globe. The suite includes:

• ForumPortal, a tokenisation, registration and issuance platform;
• Forum Trader, a secondary trading front-end and order management system;
• ForumMatch, a high-performance exchange trading platform with integral matching engine;
• ForumDetect, a market surveillance system;
• ForumIndex, an index calculation and dissemination system;
• ForumCustody, a digital custody platform for clearing and settlement;
• ForumWallet, a wallet management platform, which can also interface with third party wallets;
• ForumCCP, a clearing platform facilitating credit checking, position keep and margining;
• ForumCSD, a central securities depository and registry platform facilitating settlement;
• ForumPay, a simple and secure platform for making international payments, money transfer, withdrawals and deposits across multiple financial instruments.

Why are cryptocurrency exchanges attracted to using GMEX?

Cryptocurrency and digital assets exchanges are attracted to using GMEX because they appreciate we have genuine proven solutions and a practical understanding of digital assets as opposed to the hype and vapourware that some are touting out in the market.

They like the fact that the technology stack is designed for the needs and quirks of cryptocurrency and digital asset markets, which can include 24 hour trading, 18 decimal places due to fractional ownership, high volume requirements and the need to offer tokenisation and digital custody services beyond just exchange solutions.

Importantly, as markets in this space become increasingly regulated, GMEX is able to support our clients with our regulatory and business expertise in operating markets across the globe, which is highly valued.

How scalable is GMEX technology?

Cryptocurrency and other types of digital asset exchanges are facing a very serious challenge with the increasing volumes of orders they need to cope with. Investors and speculators expect their orders to be executed within a few milliseconds especially in hectic market conditions i.e. when volumes are at their highest peak. Any slowness in order execution will cause loss of confidence and order flows to switch to other venues. Exchanges must ensure their technology can stay ahead of the fierce competition. Recent volatile cryptocurrency market conditions were a performance wake-up call for cryptocurrency exchanges.

Our technology stack is modular and component based and is designed to flexibly support multiple assets and numerous private and public blockchains. It also has the ability to easily interconnect many nodes, whether they are running our technology or are third party platforms. Our low-latency and high-throughput exchange solutions combined with high availability ensure successful operation in critical market infrastructure environments. Superior performance is also achieved by way of a low hardware footprint. We also include appropriate open source components to remove third party licence fees. The technology stack scales through use of virtualisation and cloud services, as an alternative to local deployment, where there is a need for a turnkey Software-as-a-Service (“SaaS”) model to be offered as an option.

You are also Chairman of the SECDEX, the Seychelles based Securities, Commodities and Derivatives Exchange. Could you tell us about the SECDEX and why it matters?

The SECDEX Group business consists of a regulated:

• Exchange;
• Central counterparty clearing house (CCP);
• Central securities depository with registry;
• Digital marketplace; and
• Digital custodian.

SECDEX is unique as it is the first fully-regulated, multi-asset, hybrid market infrastructure ecosystem combining the benefits of a digital exchange with those of a traditional exchange to deliver seamless trading, clearing and settlement. It is based on the strengths of GMEX Group as a founding shareholder combined with the professional services of Digital Partners Network (DPN) as a co-founding shareholder. DPN services include specialist legal, finance, compliance, corporate structuring, finance, strategic consulting, technology-enabled digital transformation and potential investment through a digital fund.

This is game changing, as until now there have been too many intermediaries for these different services, and they have not been offered cost-effectively under a single umbrella. This means that in addition to the listing of traditional securities and derivatives, Security Token Offerings (STOs) can be undertaken in a regulated, trusted environment with issuance, full professional services support for the tokenisation process covering legal and valuations in addition to capital raising, with listing and secondary trading on the SECDEX Exchange.

It was also recently announced that the SECDEX group has welcomed a new addition to their ranks – SECDEX Digital Custodian (SDC). Could you tell us about this digital custodian solution?

SECDEX Digital Custodian Limited (SDC) is a regulated digital custodian offering cold storage and custodial services for cryptocurrencies, security tokens and other digital assets. SDC caters to retail, high net worth (HNW) and institutional users including exchanges, marketplaces, brokers, banks, payment service providers and traditional custodians.

SDC services include:

• Safeguarding of digital assets
• Transaction recording and reporting for its users
• Automated transfers, balance confirmations and account related requests
• Escrow services
• A multi-signature authorisation protocol to ensure that no single party is able to initiate and complete a transaction within its custody. Furthermore, under its technological platform operated by the venue, each key is held with segregated accounts.

SDC, in a short space of time, has already attracted USD 544,718,948 of assets which it has tokenised with immutability and transparency on the Ethereum blockchain.

One of your other projects is promoting Blockchain solutions to drive financial inclusion across Africa. Could you share some of your views regarding this?

There are an estimated 700 million unbanked farmers in sub-Saharan Africa and every country has its own structures and complexities. At the heart of the problem is the lack of price transparency for farmers for their produce. Better prices would mean improved income, allowing them to better afford seeds, pesticides, fertilisers and even opening up credit.

FinComEco, the financial and commodities ecosystem, links agriculture to the latest financial technology down to the individual smallholder farmer level and beyond from origination to destination. This is achieved via a model which is adaptable to local requirements with an underlying ecosystem of technology, finance, exchanges, logistics, sourcing and supply chain infrastructure. Its aims are to:

• Facilitate financial inclusion with social impact for smallholder farmers;
• Bank the unbanked through facilitation of finance;
• Facilitate cheaper inputs and access to warehouses; and
• Provide commercial farmers better access to markets.

Is there anything else that you would like to share regarding either GMEX or SECDEX?

GMEX has collected feedback about digital asset deployments from securities exchanges who are

• Conscious of the importance to offer digital assets for trading
• Concerned by new technology investments
• Uneasy with the Blockchain/DLT technology due to a few scandals and scams
• Reluctant because of unknown legal and administrative implications

GMEX, DPN and SECDEX have responded by combining their strengths in a single value proposition with a multitude of technology, regulatory and services options to enhance the knowledge and associated business opportunities available to traditional securities exchanges.

With a growing number of jurisdictions recognising security token equivalence to traditional securities, it is now evident that exchange operators should embrace the transition to digital or, more appropriately, a hybrid integrated approach. Traditional exchanges, whether incumbent or challenger, are now acting under similar regulatory frameworks and are on the same level playing field with regard to digital assets. Early movers are taking advantage of this new territory. However, given the pace of change and anticipated exponential growth of the digital economy, firms should see this as a catalyst to re-engineer their objectives, processes, and strategies rather than just replace like for like. It is vital to act now to leverage this opportunity and to be part of the paradigm shift into this new era of digital exchanges and post trade, which ultimately can benefit investors, SMEs and the wider capital markets.

Thank you for the great interview answers. Readers who wish to learn more should visit:

GMEX Group (GMEX), offering innovative solutions for the creation & operation of electronic exchanges and post trade infrastructure in securities, FX, derivatives, commodities, crypto & digital tokenised assets.

SECDEX, the Seychelles based Securities, Commodities and Derivatives Exchange, which is a full ecosystem for digital and traditional assets enabled by blockchain technology.

Andrew is the Chief Executive Officer at Crowd for Angels an equity crowdfunding platform. He often attends and speaks at events on Crowdfunding, Alternative Finance and Investment. Previously, he worked at NinetyTen, a web application developer and provider of Private Social Networks, whose clients included Nokia, Channel 4 and Shop Direct

You were one of the original Co-Founders of Crowd for Angels. Can you discuss the inspiration behind launching this business?

I was indeed one of the Founding team at Crowd for Angels, but the inspiration for launching the company comes from our Director Tony de Nazareth, who combined his decades of financial knowledge with the ‘social media’ approach. This was to get the community involved when funding and supporting a business, thereby creating brand advocates that not only financially supported the aspirations of a company but also became a voice and customer of the company.

How much do you involve yourself in the pitch decks and packaging the deals that are found on Crowd for Angels?

I am involved in most companies that seek to list on Crowd for Angels. I take a genuine fascination in the lives of start-ups and companies looking to expand. Each has its own story and passion, which I am enthused by. Having raised funds for my own company and invested in many others, I hope to provide insight for the company.

What type of due diligence is performed on the companies that are listed?

A lot! Crowd for Angels breaks due diligence down into 3 key areas, firstly, we conduct factual checks such as KYC, AML, PEP, Credit Checks on the directors, reviewing accounts produced by the company and verifying facts stated on their pitch. Secondly, we conduct market checks, for instance, is the product available and as described, is there an addressable market, is the valuation reasonable, what legal challenges the company might face and is it ethical. The final check is one of sanity, which is not only tested by Crowd for Angels, but also by our Angels, who will ask the company their own questions.

What are some of the main reasons behind companies being turned down for listing on the platform?

There can be a number of reasons but a few we find most common are as follows:

• The valuation is simply too high in comparison to the companies position
• The company does not provide documentation (business plan, management accounts, incorporation documents)
• The product is too early-stage or not yet developed
• The directors have no ‘Skin in the Game’

What are the biggest benefits of equity crowdfunding?

I personally believe the biggest benefit is the ability to create brand advocates, people who support your business financially and become active customers, drawing in others to check out your brand, whether that is through word of mouth or social media.

Could you give us a success story of a company that raised funds on the Crowd for Angels platform?

One of my favourites is a company called CNPPS. A young entrepreneur, who was studying engineering at university at the time had created a permeable pavement solution that used recycled aggregate. Now that might not sound as fascinating as an app, but our world is covered in roads and pavements. His solution, used 100% recycled aggregate and was carbon negative, furthermore, it allowed water to pass through. Working with the entrepreneur we were able to raise £100,000 for a phase of testing that has now led on to a commercial contract and further funding for the company.

What made it interesting was the ethical approach the company had took to change an old industry, the tenacity the entrepreneur showed never giving up and that a business can truly be grown from the ground up, out of university none-the-less. So far in a 2 year period, the company’s valuation has increased 4 fold, delivering a solid return for the Angels involved.

Crowd for Angels is one of the few crowdfunding platforms that accept bitcoin. How many investors use bitcoin, and where do most of these investors originate from?

Yes, we have been accepting cryptocurrency as a form of payment for investment since early 2016. At that time, we integrated this payment option to allow foreign investors to invest in UK companies without the costs and time associated with international bank transfers. Initially, we saw a number of Australians, Chinese and mainly Asian investors utilise this form of payment. However, as bitcoin and other cryptocurrencies gained in popularity, we did see growth in European investors utilising cryptocurrency. Partly this is due to the gains they might have experienced and I believe the convenience cryptos offered. Now, we have over 14,000 members registered with a cryptocurrency wallet on our platform, with many of them in Europe.

A few years ago, the ANGEL token was released. What are the use cases for this token?

The ANGEL token was released to drive down the user acquisition cost of investors whilst rewarding stakeholders for interacting with our platform. It is hoped that when users interact and share content in the network, say an investment they had just made in a fledgeling company, that they would be rewarded with ANGEL. Crowd for Angels has then committed to buy back and burn ANGEL linked to the revenue generated from our pitches, thus creating a virtuous circle. We hope in the future, our Angels will also be able to use the ANGEL token as a method of payment towards an investment.

How do you see digital assets and digital securities eventually merging with crowdfunding?

Crowdfunding utilises technology to allow the masses to invest small amounts into pitches, but the shares are usually held with a nominee and should you wish to sell them or give them to someone else, it is difficult. Therefore, the integration of digitalised assets should be a no brainer, because it potentially gives the control of the asset back to the investor and follows a set of rules, that can’t be broken. In a utopian world, you would allow investors to purchase, hold and trade any assets that they wish. With the blockchain, you benefit from an immutable ledger that would record these transactions, giving you efficiency and transparency. I believe we are only a stones throw away from some big changes.

Is there anything else that you would like to share about Crowd for Angels?

We are always open to ideas, a conversation can go a long way.

Thank you for the interview. Readers who wish to learn more may visit our Crowd for Angels business listing or the Crowd for Angels website.