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Playing in the ‘Tokenization Sandbox’ with Vertalo

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Launch Day

Digital securities are here.  We know what they can do, and the opportunities that they can open up.  All that is needed now is a good sales pitch, and adoption will come;  A pitch that doesn’t just promise, but actually delivers on things like,

  • Cost savings
  • Intuitive platforms
  • Accessible
  • Flexible

In an effort to expedite this adoption, Vertalo has just announced the launch of their free ‘Tokenization Sandbox’.  With it, they hope to check off all of those points, and more.  Vertalo has the following to say,

‘Through this new initiative, participants in the Digital Asset industry can, at no initial cost, implement and learn by tokenizing digital assets in transactions that would otherwise incur expensive software development and consulting fees that routinely cost in excess of $50,000 dollars per single asset tokenization.’

Sandbox

So what exactly is a Sandbox, and why are they important?

We all need a safe space, and that is exactly what a Sandbox is – a testing environment which acts as a safe space to experiment and try new things.  In this particular instance, the Sandbox has a theme – Tokenization.

We need sandboxes, because they facilitate change.  This could be change to regulations by proving to those that make them, that there are new ways of achieving old goals safely. Or maybe it is a scenario, such as the one described here today, where a new sector is trying to garner new users and adoption through validation of the potential in their offerings.

Why Now?

Vertalo has stated that the goal of this launch, is to drive adoption of digital securities.  Why now though?

Well, the world’s economy is changing.  Traditional means of investing, and the services which make it possible, need to change with it.

With the current state of flux surrounding investment operations worldwide, the present is as good a time as any to begin really pushing for the adoption of new standards;  Standards which Vertalo is working hard to develop, and fuel adoption of.

Is Anyone Listening?

Now that we have established what a sandbox is, and why one is needed now, is there anyone actually interested in taking part?

Before having even launched, 27 companies, and counting, have already applied to take part – essentially conveying a resounding ‘YES’.

Some of the noteworthy names among those to be participating include,

What’s in the Box?

Those joining the fun in the Tokenization Sandbox, can expect a variety of features and capabilities on offer.  They list the following solutions as being included:

  • Cap table and investor list file upload.
  • Tokenization of the cap table or client list in minutes.
  • Deployment of the newly-issued token across a cap table or client list in minutes.
  • Creation of Keyless Wallets in minutes that are accessed over the web using email address and password.
  • Investor access to their Keyless Wallet accessed through an email/password driven website.
  • Option for investors to utilize self-sovereign wallets in lieu of their Keyless Wallets.
  • Implementation of a Controller Function to enable Issuers to address fraudulent or mistaken transactions, abandonment, escheatment, and transfer upon death requirements.
  • Ability to swap chains in minutes without impacting the underlying security or its Investors.
  • Connection to previously integrated Service providers

While Vertalo continues to support multiple blockchains, they have made it clear that they feel Tezos is the answer, moving forward, for a variety of reasons, which we took a look at HERE.

Who is Eligible?

With adoption being the goal, it is convenient that the Tokenization Sandbox is open to a wide variety of candidates.  Those eligible for participation include:

  • Token issuers
  • Broker-Dealers
  • Custodians
  • Exchanges
  • Alternative trading systems (ATS)

With 27 right out of the gate, it shouldn’t be a surprise to see companies fitting within each bullet point taking part.

Commentary

Along with launching the Tokenization Sandbox, Dave Hendricks, CEO of Vertalo, took the time to share his thoughts on what the program has to offer.  He stated,

“The Vertalo Sandbox Program is an innovation that is designed to reduce obstacles to digital asset transformation and to empower market participants…In order to create confidence in the digital transformation programs, we need to move past expensive services for commodity transactions such as token issuance.”

He continues,

The Vertalo way to do this is to empower companies to model and learn from their tokenization activities, in a freemium and no-risk manner, in the Vertalo Tokenization Sandbox. As companies finalize their capital structure, fundraise strategy and issuance process, Vertalo can assist these companies by moving them into production, or they can seek the services of another provider if Vertalo is not a fit. Exposing investment banks, issuers, and broker-dealers to Vertalo’s user-friendly platform will push us far ahead of where we are today.”

Building Momentum

If you recognize the name ‘Vertalo’, it might be from our recent look at their work with RECM.  In this look, we discuss the tokenization of up to $300M in real estate, with Vertalo underpinning the entire process.

Vertalo to Underpin Tokenization Effort Surrounding RECM Portfolio

Vertalo

Based out of Austin, Texas, Vertalo was founded in 2017.  While specializing in cap-table management, Vertalo have expanded their capabilities, providing a diverse set of services surrounding digital securities.

CEO, Dave Hendricks, currently oversees company operations.

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Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Digital Securities

FinTech ‘Unicorn’ Revolut Shows Positive Growth in 2019 Annual Fiscal Report

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Revolut, a tech ‘unicorn,’ and one of the more promising FinTech platforms on the market today, has recently released its annual fiscal report.  The annual fiscal report touches on the various accomplishments, setbacks, and financial markers surrounding the company’s operations throughout the 2019 fiscal year.

By the Numbers

Revolut has various developments to share, and the numbers seem to be trending in a positive direction.

The following is one key metric provided, which demonstrates the direction that its decisions have resulted in – active users.

  • 2018 : 3.5M
  • 2019 : 10M
  • 2020 : 13.5M and counting

As its user base increases, so do its cash holdings on the users’ behalf, with this total jumping from £903M in 2018 to roughly £2,281M in 2019.

Furthermore, Revolut notes a substantial increase in 2019 revenue vs. 2018 (£162.7M vs £58.2).  Of course, larger operations also result in great operational costs.  Revolut witnessed a substantial jump in revenue as well as a tripling of operational costs over the same time frame, jumping to £107.4M in 2019 from £34.01M in 2018.

While expansion into new markets may be fuelling this jump in revenue, expansion has been made possible in the first place by a series of successful capital raises.  Revolut successfully raised £580M in investments in the first half of 2020 alone, and we expect to see additional funds raised.

Service Expansion

Undoubtedly, various platform features implemented over the course of 2019 are also responsible for a portion of Revolut’s growth.  A few examples of these include:

  • Support for Apple Pay
  • Commission free trading of U.S. listed stocks
  • Expansion to Singapore, Australia*, United States*, Japan*

*launched in beta

Looking Forward

Despite not turning a profit, 2019 was an overall positive year for Revolut, considering its ongoing desire for global growth.  Looking forward, the company has already established a game plan to ensure profits are one day realized.  The following is an excerpt from the fiscal report, touching on what these plans entail.

  • Future investment in the technology infrastructure and development of the core product offering to Revolut customers,
  • Continue to operationalize Revolut Bank UAB and the roll-out across other European markets,
  • Obtain further regulatory authorizations required to expand our product offering across jurisdictions,
  • Develop existing operations in international jurisdictions including North America and Asia Pacific whilst continuing to expand our operations across the UK and EEA,
  • Further investment in the customer support, risk and compliance infrastructure

Canadian Expansion

Whether looking at the revenue or losses sustained in 2019, each can be largely attributed to a desire for global expansion.  Revolut has established a strong foothold in both the United Kingdom and Europe and has plans for expansion.

One example is the company’s anticipated entrance into Canada.  Although Revolut has not provided an anticipated launch date for Canadian services, interested users can currently join a waitlist for early access.

When this entrance inevitably occurs, Revolut can expect strong competition from various other FinTech outfits establishing themselves in Canada.  We recently touched on an example of this, as Canadian based, WealthSimple, launched a new crypto trading service.

As each of these companies develop and launch new services, the companies simultaneously become more comprehensive, and closely linked as competitors.  Whether looking for investment capabilities, savings accounts, crypto trading, pre-paid debit cards, etc. – Revolut and its competitors have you covered.

Looking beyond these two, and the increasing list of FinTech companies following suit, it would not be surprising to find truth in rumours that PayPal will soon join the fray.

Revolut

Founded in 2015, Revolut is a FinTech company, with operations based out of London, England.  In the time since launch, Revolut has developed a suite of services surrounding digital banking.  Adoption of these services has allowed the Revolut team to expand, totaling over 2000 employees, to date.

CEO, Nikolay Storonsky, currently oversees company operations.

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Regulation

Traditional Banks Ramp Up Custodial Services for Digital Assets

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Traditional Banks Ramp Up Custodial Services for Digital Assets

In recent weeks, we have seen an increase in the adoption of blockchain services, among traditional banks.  First, U.S. based banks were given the green light to custody cryptocurrencies by the Office of the Comptroller of the Currency (OCC).  Now, we learn that one of the largest banks in South Korea, KB Kookmin Bank, is already working to develop similar services.

Who’s Involved?

With regard to South Korea, the plan is for KB Kookmin Bank to begin offering custodial services for digital assets.  This is a group effort involving the following companies,

This collaboration is particularly noteworthy, as KB Kookmin Bank is not just any old bank.  They are currently the largest bank in South Korea.  Moves made by a bank of this stature are followed closely by many.  Although KB Kookmin Bank and its partners may be first to the table, expect to see others take a seat in the near future.

Future Asset Expansion

While initial services will centre on the custody of cryptocurrencies, it is believed that this support will eventually grow, encompassing various types of digital assets.  More specifically, it is expected that in time, these custodial services will support digital securities.

In commentary released by Hashed, this expansion of supported assets was touched upon.  Hashed states that through this collaboration, participants anticipate, “…that the digital asset industry will not only involve cryptocurrencies, but also other traditional assets such as real estate, artwork, and other reified rights that will be issued and traded on blockchain platforms.”

Although cryptocurrencies stand to benefit first, the development of such custodial services has the potential to transform and usher forth new growth among the digital securities sector.

Office of the Comptroller of the Currency

In the weeks preceding the news surrounding KB Kookmin Bank and its forthcoming custodial service, we saw the OCC release of an interpretive letter on the subject.

In this letter, the OCC breaks down, not only what digital assets are, but how banks can support the growing use.  The OCC summarized its stance, stating,

“The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers. By providing such services, banks can continue to fulfill the financial intermediation function they have historically played in providing payment, loan and deposit services.”

It continued,

“…we conclude a national bank may provide these cryptocurrency custody services on behalf of customers, including by holding the unique cryptographic keys associated with cryptocurrency.  This letter also reaffirms the OCC’s position that national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law.”

Bank Adoption

Which came first, the chicken? Or the egg?  This old saying could easily be applied to the current world of blockchain.  Are these traditional banks jumping on board the train due to the recent resurgence being seen in the sector?  Or is the sector surging due to banks jumping on board.  Regardless of the answer, signs of blockchain adoption within traditional industries is a definite positive.

Hopefully, this swing in sentiment among banks continues to gain momentum, as banks have not always viewed digital assets in a positive light.  Only months ago, we were reporting on difficulties being faced by German companies, as they were refused services by traditional banks.

KB Kookmin Bank

Founded in 2000, KB Kookmin Bank maintains operations in Seoul, South Korea.  Since launch, KB Kookmin Bank has grown to employ over 25,000, while providing customers on a global scale with access to commercial banking services.

CEO, Hur Yin, currently oversees company operations.

Office of the Comptroller of the Currency (OCC)

The OCC is a U.S. based regulatory body, tasked with supervising national banks.  This supervision is undertaken with the goal of ensuring fair and transparent financial services to all customers.

Acting Comptroller, Brian P. Brooks, currently oversees operations at the OCC.

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Digital Securities

META 1 Coin Threatens Securities.io with Litigation for Reporting on ICO Fraud

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META 1 Coin Threatens Securities.io with Litigation for Reporting on ICO Fraud

On August 4th, 2020 Securities.io was threatened with legal action by Robert Paul Dunlap, the legal advocate for META 1 Coin, the creator, owner, controller, and also one of the defendants in the Complaint filed by the SEC. The threat followed the publication of an article titled “SEC Files Charges Against ex-Senator David Schmidt” which was published on March 25, 2020.

Who is META 1 Coin?

META 1 Coin raised funds in April 2018 by performing an Initial Coin Offering (ICO).  As described by an SEC filing META 1 COIN raised at least 4.48 million from over 150 investors in the United States and internationally.

In order to raise funds misleading claims were made. These were some of the claims:

  • They owned $1 billion in art insured against loss by a surety bond, and later, that META 1 owned $2 billion in gold assets;
  • KPMG, one of the largest independent financial audit firms in the world, was auditing Meta1’s gold assets;
  • Meta1 formed its own investment bank and developed its own digital currency exchange;
  • the Coin is safe and risk-free and will never lose value;
  • Each Coin, sold for either $22.22 or $44.44 would in two years be worth $50,000—up to a 224,923% return—as a “very conservative value.”

Unfortunately many investors did not perform adequate due diligence as the SEC claims the tokens were backed by nothing.

Litigation Threat:

The letter received by META 1 accused the SEC and Securities.io of being fraudulent, below are some of the accusations/threats and our responses.

If SECURITIES.io was to do any due diligence at all you would know it was a fictitious story fabricated by the SEC in order to make all digital assets look fraudulent.

Our response: Securities.io has the responsibility of reporting on both legitimate projects, and fraudulent projects. Every time an investor is taken advantage with false claims whether it is the form of an ICO, or other fraudulent behavior, it destroys the credibility of the industry. We also believe in the credibility and the mission of the SEC which is stated as “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation”.

So time will tell if SECURITIES.io is really about digital assets or just another STATE run publisher of malicious defamation.

Our response: Perhaps this is pushing a conspiracy theory or an agenda of being owned and controlled by a deep state. Either way, Securities.io is NOT owned in part or in whole by any government entity in any jurisdiction.

Today is August 4th 3:25 EST 2020 and a claim will be made in 24 hours and It will decimate SECURITIES.io if the named article is not immediately removed.

Our Response: This has been noted. We have fact checked the original article and it remains accurate.

Additionally, I am ordering a follow-up update of the facts regarding the validity or META 1 Coin

Our Response: We have updated the article to reflect new information regarding the fraud behind the initial ICO raise. We were unaware that information was missing, thank you for notifying us of this. Whenever we are notified of errors in reporting we take corrective action.

Summary:

Unfortunately, the digital assets industry continues to result in many operators that are taking advantage of the naivety of investors. It is our responsibility to report on this unethical behavior and to report on any actions taken against these rogue operators by the SEC or other government entities. We will continue with our mission.

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Trading Risk Disclaimer: There is a very high degree of risk involved in trading securities. Trading in any type of financial product including forex, CFDs, stocks, and cryptocurrencies involves a high level of risk.

This risk is  higher with Cryptocurrencies due to markets being decentralized and non-regulated. You should be aware that you may lose a significant portion of your portfolio.

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