Speaking Saturday at the Cryptochicks Conference in Toronto, Zoe Adamovicz, CEO of Neufund, an online equity token-investing platform based in Germany, characterized the current regulatory crackdown in the US as as much about “protecting investors” as a matter of “jurisdictional competition,” where countries, negotiate how to “welcome or protect” certain industries.
Countries with large capital markets like the UK, US and China are guarding established players, she said. “You can only do accredited investors in the US, which basically means rich people.”
“It’s sort of like war between Silicon Valley and Wall Street. It’s OK for Silicon Valley to do technology, but not OK when they start to do too much finance. Then it’s, ‘Call in the SEC.’”
“The US doesn’t want blockchain because its the end of Nasdaq…This is killing IPO’s.”
European firms like settlement firm Clearstream are also affected.
“Clearstream is a huge monopoly; blockchain automates them.”
Nonetheless, blockchain tokenization is still more easily accomplished in Europe, said Adamovicz. “You need proper legal setup,” but the European legislative climate is “progressive,” with Germany “quite” progressive.
“Super progressive Malta has created an actual real law that covers blockchain. They even have the word DAO in the legislation which is very good.”
Neufund, who claim, “key expertise…in legaltech and regtech,” are one of a number of companies worldwide now offering reg-compliant security token services to both companies and investors. Their website states that, “An ETO is a hybrid investment model combining advantages of an IPO, an ICO, and a VC round. Typically it is accompanied by a campaign or a roadshow.” Neufund generates PDF equivalents of smart contracts on their chain, which are intended to make agreements legal.
In her talk, Adamovicz outlined problems produced by a “disconnect” or confusion around a crypto product’s true function.
Early on, many ICO-issuers were unclear, perhaps deliberately, and offered a “universal” crypto product that combined currency, utility and equity functions. Once deployed onto exchanges, the utility of tokens, whether for payments or voting or access to services, became obstructed by volatility and deflation properties exhibited in trading markets. Paying for a coffee with Bitcoin, for instance, has been characterized by VC David Schirmer as, “Going to the saloon and plunking gold dust on the bar.” The variable fortunes of traded tokens have interfered with their practical capacities.
The rise of the utility token in 2018, said Adamovicz, is, “ICO 2.0. They mix the goodness of IPO, ICO and VC in one; any company can do an ICO this way.”“ICO 2.0. They mix the goodness of IPO, #ICO and VC in one; any company can do an ICO this way.”Click To Tweet