DarcMatter Hosts an Evening of In-Depth Talks about STOs with Many Industry Leaders
On a cold night in Seoul, just a few days after the successful completion of our 2nd annual DarcMatter Alternatives Conference (DMAC 2018), the blockchain leaders of DarcMatter gathered together an impressive array of industry thinkers to discuss the future of digital asset investment at #Hashed Lounge in the world famous Gangnam district on Thursday, December 6, 2018. More than 70 attendees watched a long night of presentations from representatives from not only DM but also CryptoAngels, MakerDao, Polymath, and BCW Group.
For the blockchain industry, it has certainly been an early and long winter, with no end currently in sight. That’s why DarcMatter feels it is critically important to sponsor these types of “meeting of the minds” events, much in the same way that we rally the alternatives industry around our DMAC events.
DarcMatter CTO, Stan Solodkyy, began the night with a comprehensive overview of the existing DM platform and its plans to integrate NEM blockchain technology to further the startup’s mission to increase transparency and efficiency for asset managers by providing comprehensive access to quality funds for all accredited investors throughout the world.
After this brief project description, the rest of the speakers focused on their expectations for the blockchain asset space in 2019 and beyond. The overwhelming conclusion from all those involved in the evening’s discussion, was that the future of blockchain-based digital assets can only proceed from within a clear and robust regulatory framework that allows for transparent and efficient fundraising for all types of projects. How far away are we from such a framework? It could be a while.
However, as Nicholas Krapels, Director of China Business Development for DarcMatter pointed out in his presentation, “On STOs, US Regulation, & the Ever-Shifting Fundraising Landscape,” many cryptocurrency projects often forget that US securities regulation is already in place and already fairly robust. US securities legislation was put in place after the Stock Market Crash of 1929 and has been shaped and refined slowly over the years since. The Securities Act of 1933, the Securities and Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940 form the bedrock of US securities legislation that regulates fundraising projects even today. Projects that knowingly offer investment opportunities to US citizens have to be very cognizant of these laws and all of the accompanying legal decisions and updated legislation that goes along with them.
But it’s not rocket science. It’s a legal matter.
Tommy Ryoo, the principal investor for Korea’s CryptoAngels fund, posited that security token offerings (STO) is a powerful trend that we cannot ignore, while the explosive growth era of initial coin offerings (ICO) has drawn to a close. Mr. Ryoo believes that startup funding via STO will be much accelerated. He also shared his perspectives on the practical processes needed to launch and execute an STO.
Almost all of the speakers agreed with Mr. Ryoo about the inevitability of the switch from ICO (initial coin offering) to STO (security token offering). Although there has yet to be the successful launch of a security token exchange, the industry is scrambling to create the large supply of security tokens necessary to facilitate such an exchange once compliant trading commences. After all, in the past three years, there were 70 times more funds raised in the private markets than there ever were for ICOs. If STOs can grab just a 5% market share in this existing private fundraising industry, it would already be more than three times larger than what ICOs ever were.
One of the projects leading the charge toward compliant token listings is Polymath. Heslin Kim, Vice President of Business Development at Polymath Holdings, Inc., discussed his company’s goals in a presentation titled “The Future of STOs.” His speech highlighted the need for a diverse ecosystem of service providers that are necessary to launch a security token. Polymath’s ST-20 Ethereum-based token standard is a part of the solution. However, the need for such standards to evolve across multiple public and private blockchains and be enforced across multiple jurisdictions highlights just how much work there is left to do.
As they say, it takes a village.
A necessary part of a strong and sturdy security token ecosystem is a quality stablecoin. Doo Wan Nam, a Korean analyst for MakerDAO, presented his views about what is currently the cryptosphere’s only decentralized (and therefore easily scalable) stablecoin solution, DAI. Their project requires users to stake ethereum (ETH) to create a collateralized debt position (CDP) that correspondingly mints stablecoins (DAI) that are pegged to the US dollar. The obvious weakness of the project is that it currently only accepts one asset — ETH. However, as Mr. Nam stated, the project soon hopes to incorporate multiple assets to collateralize the debt that backs DAI. Interestingly, STOs could provide a wealth of blockchain digital assets to include in this multi-asset pool. Such a collection of assets would be uncorrelated to the blockchain industry itself, thus providing a significantly more stable stablecoin.
Of course, no ecosystem would be complete without trusted advisors and connectors. To fulfill that role, we had Oojin T. Mudgett from Blockchain Communications Worldwide, better known as BCW Group. His presentation focused on all of the pieces of the puzzle necessary to create compliant security tokens and quality projects: tax and legal advisors, technology partners, cybersecurity and KYC/AML partners, exchanges, marketers, asset custodians, treasury management, community management, etc.
You know what they say. It takes a village.
Thanks very much to all of our participants, attendees, and presenters on the evening. Let us all work together to create a better and brighter future for the blockchain digital asset investment industry! We at DarcMatter firmly believe that the recent market swoon offers the industry as a whole a remarkable opportunity to reset and build stronger projects in tandem with, not in opposition to, regulators and regulations.
Make sure to follow this Medium channel for more updates about DarcMatter’s blockchain project. We expect to have a lot of exciting news to share with you in 2019 and beyond.
Best wishes and happy holidays,
The DarcMatter Team
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