Antoine: Can you tell us about the Tokeny issuance platform and how it differs from competitors?
Luc: At Tokeny we are the European leader in terms of tokenization platforms. We provide our customers with the modular end-to-end platform they need to digitise their assets. For single issuers we can automate complex and cumbersome processes that are involved in the distribution of traditional securities. For multi-issuers, such as investment banks, asset managers or marketplaces, we deliver our solutions via a white-label platform and a set of APIs.
We are currently the only live platform in the market that has the technology to digitise the issuance, the compliant security transfer and the post-issuance servicing. Our compliance system is also unique, as we are the only company worldwide with an onchain validator to enforce the necessary rules and regulations that govern financial securities.
Antoine: How did you personally become involved?
Luc: I have over 10 years of experience in entrepreneurship and software development. I worked with some of the largest e-commerce marketplaces in Europe and eventually, I sold my stake in 2017. At this time everybody was talking about decentralized marketplaces, and because of my education I understand how securities work and I saw the purpose of applying blockchain to financial markets. This was when Tokeny was born, and we’ve been building the technology ever since.
Antoine: Where’s Tokeny headquartered? What made you choose this jurisdiction?
Luc: We are headquartered in Luxembourg but we also have operations in London, Paris and Barcelona. We chose to be headquartered in Luxembourg as globally it’s second in terms of money under management, with the US sitting first. In March, €4300 billion was invested into Luxembourgish funds, so of course this is a very interesting place for a company like ours. It is also one of the leading financial centers in Europe, and we are very close to the other leading cities like London, Paris and Frankfurt.
Antoine: You initially tokenized ICOs and then pivoted to offering STOs, what made you decide to pivot?
Luc: The initial vision for Tokeny was to tokenize securities. However, in 2017 the market wasn’t ready for this. So, we saw an opportunity with ICOs, and it was the perfect MVP. There was a high market demand, ERC20 tokens are simple and the compliance was straight forward too. But now it is the time to start tokenizing financial securities and for over a year we have been developing our product to do exactly this, so our technology is ready.
Antoine: How many customers do you currently have? How many new customers are you on-boarding each month?
Luc: We have more than 30 customers and currently select 2 or 3 customers per month. We are now starting to work with multi-issuers such as investment banks, marketplaces and asset managers. Technically we have the capacity to tokenize thousands of assets per month but for each project the issuer needs some guidance on the partners selection as the ecosystem is still being built.
Antoine: Which verticals are the most popular on your platform?
Luc: Equity attracts a lot of interest, but shareholder agreements can become quite complex and given the infancy of the market it isn’t the easiest asset to tokenize. However, most companies should start tokenizing debt as this is a much simpler process to issue and the benefits are immediate. Real estate is very interesting too as this is a typically illiquid asset class. By representing this asset on the blockchain, ownership can be settled in seconds, rather than the need of selling the underlying asset. The case is similar with other types of closed-end funds.
Antoine: What’s the process for a company that is interested in your tokenization services? Are there minimum requirements that they need to meet?
Luc: Yes, of course. We receive many enquiries each month but we only select the best projects and those that are asset backed. We have a due diligence process and the projects need to be led by an experienced team, KYC & AML checks on all the beneficial owners need to be processed and we require the legal documentation to setup the platform.
Antoine: Tokeny recently launched InvestorID. Can you describe with this product is?
Luc: InvestorID is a not for profit and open ecosystem allowing investors to generate their on-chain identity to access and trade compliant tokenized securities. It provides them with the platform they need to create their identity, control their personal data and enable issuers to act in full compliance. It is a single entity linking the proof of identity, so the KYC and AML segment, with the wallet of that entity. In a way, you can see it as a KYC aggregator. Under European law it is unlawful to whitelist wallets and so we came up with this method to represent investors on the blockchain and fill this missing piece of the puzzle.
Antoine: Tokeny also recently joined the non-profit Global Digital Finance Registry. What are the advantages of being a member of this registry?
Luc: The aim of this organisation is to standardise terminology across the digital assets sector. If there is no standardisation across the industry, how will mainstream adoption be achieved? They bring community members, of which includes market participants, regulators and policy makers, to contribute to the set of standards with the goal of achieving uniformity and global adoption. Educating the market is a core objective for us, and joining the GDF was something that completely aligned with this value.
Antoine: Where do you see the digital securities market in five years?
Luc: In five years time I see interoperable assets having opened a lot of opportunities and benefits. The technology will be in place to reduce the successive layers of reconciliation that are currently present in custody chains, the benefits in collateralization will be realised and the impact in terms of transferability will be present. All in all, I think there will be a much greater awareness of blockchain and its impact on financial markets. If you look at the sentiment this time last year, the attitude has changed significantly. In five years it is of course hard to predict, and easy to be over optimistic, but I think there will be wider recognition of blockchain’s impact because there will be working examples across capital markets. We can also imagine some projects like Libra bringing a lot of awareness if people start managing some of their money and assets on this blockchain.
Antoine: Is there anything else that you would like to share about Tokeny?
Luc: Tokeny Solutions is a toolbox for investment marketplaces and we provide the layer of technology needed for these players to benefit from working with blockchain. Benefits such as automation, efficiency, increase in the speed of transfer times and so on, can be achieved by these companies without building the complex technology that’s required. These markets are also lacking from digitisation, and we provide them with the tools to enable and benefit from digitizing their services. Although we are working with a number of them, there is still a huge need for digital distributors of tokenized securities.
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