September 2018 Crypto / Blockchain Trends & Learning
The pace of blockchain and crypto is breathtaking. From a little known technology and fringe digital currency, to mainstream disrupter with a total market cap of $200Bn in a few short years. The bull / bear runs of the past 12 months have also been a phenomenon, with the incredible effects that you would expect: speculation, greed, innovation, and regulatory scrutiny.
Regulation is fast increasing, which isn’t stopping the momentum, but changing the landscape and helping bring clarity and understanding to the industry. Bad actors are being issued subpoenas, and good projects are being well supported by regulators and VCs. Equity investments into crypto is reaching all time highs in 2018.
Here is a snapshot of things that we’ve been finding interesting and credible:
Privacy Coins. The popularity and development of these projects is expected to accelerate. Keep an eye on Zcash, Monero, and Dash.
Exchange Regulation. We are expecting to see a crackdown on exchange practices to continue the regulatory clean up of the industry.
Dfinity. This project is making some strong moves but its early days. Aiming to be a top tier crypto, Dfinity is a blockchain supercomputer designed to host the next generation of software and services — Cloud 3.0. We will be watching this one.
Scaling. Scaling solutions are progressing allowing for greater numbers of dApps and users. OmiseGo’s Tesuji Plasma platform beta is live on testnet! Plasma is one of the most interesting scaling options for Ethereum projects. We are watching this closely and are keen to see the outcomes of the beta testing.
Stablecoins. MakerDAO is making huge progress, it seems. According to Mike McDonald, creator of Maker Tools, a startup issued 3,270 loans since December worth $114m at an interest rate of 0.5% using their tools. Collateral Debt Positions (CDPs) have opened on DAI since December 2017
A16z invests US$15m into MakerDAO Stablecoin.
Don’t forget our own Meld Gold Coin with Melbourne Mint!
Adoption. An interesting project has made a start at bringing -no-coiners’ in. So if you have no wallet or coins, you can still participate. All Aboard Alliance has created a simpler user flow to ensure that registering for the necessary software is a breeze!
Regional Developments. The PWC / Crypto Valley report shows that the US, Singapore and Switzerland are the top crypto countries, followed by Hong Kong, Gibraltar, Malta, and Liechtenstein.
For me this week was a great way to see what was happening in blockchain in Singapore, and in Asia. Consensus, Switch, and Immutable Summit, were solid offerings to connect and see what progress is being made.
Crypto industry has slowed from the “Lambo” times of New York.
Security Tokens were in focus as a growth area. We attended events by the Gibraltar Stock Exchange and Singapore Stock Exchanges who both talked of the coming revolution to tokenize asset.
A personal note from the organiser, XSQ CEO, Zhuang, showed that he wasn’t sure that Singapore could pull this off. He pulled it all together with friends from Hong Kong, Japan and Seoul. It shows that Singapore is still progressing with its understanding and acceptance of blockchain and crypto.
Now to our favourite subject at the moment and major emerging trend……
Security Tokens
A joint report between PWC and Crypto Valley Association shows that Initial Coin Offerings (ICOs) have been very prominent again up to June 2018, dwarfing traditional VC numbers, with the volume already twice as much as 2017 with more than $13.7 Billion being raised globally ($5.8 Billion was raised in the top 2 raises — Telegram and EOS).
With the global success of ICOs you would think that their momentum was guaranteed. But due to significant regulatory pressure, the Security Token Offering is making progress as a competitive structure for raising money through crypto. ICOs are a great vehicle for distributing a new protocol to users, but the problem is, structure is so new and unknown, its causing some parties to move toward structures that are already known and regulated.
Security Token Offerings (STOs) provide some structure to the complications of starting a new decentralised business. Utility Tokens are normally born into new businesses, with no platform and where technical, product and community development is needed. So the ICO is required to fund these processes, before the utility token is distributed and decentralised. And this causes a regulatory issue as the funds raised seem to act like an investment.
The investment nature of this initial funding has brought in regulators, who have deemed many, if not all, such investments to be security investments, governed by securities law. So a Security Token Offering (STO) solves this problem, by the issuing business issuing tokens that act as securities in the jurisdiction issued. Security Tokens therefore usually have ownership rights over real world asset (revenue share, debt, equity, property), and are supported by legal structures.
Security Token Use Cases
In Queensland, Australia, a Security Token Offering is being used to fund the $300m redevelopment of a Qld tourism icon, Great Keppel Island. The promoters are selling 88% of the island through GKI Tokens, which will be backed by the value of the development. Tower Holdings, the current owners, had to do considerable research before accepting crypto as a viable funding option., after finding funding difficult in other channels.
Airbnb recently asked SEC to let it give hosts equity! Stock sharing is a great way to build engagement and shared goals. We have all seen the issues surrounding Uber and their centralised model. Airbnb sent a letter to the SEC stating that, as a community-based company they would be nothing without their hosts, and therefore Airbnb requested the right to be shareholders.
Security Token platforms to watch include:
- Polymath Network — US based platform for issuing security tokens and crowdfunding
- Harbor — reengineering private securities with blockchains (US)
- Neufund — companies can legally tokenise their equity and raise money (Germany).
- Swarm — AI driven, decentralised, security token platform
- Open Finance Network — OFN is building the first US based regulated security token trading platform, built for a tokenized future
Singapore
While in Singapore this month we met with the Gibraltar Stock Exchange, who are building a leading exchange for security tokens, and a related protocol for issuing security tokens.
The Singapore Stock Exchange also ran an event there talking about the revolution to tokenize assets.
And we met with InvestaCrowd who are building a security token crowdfunding platform and exchange based in Singapore and we are looking to work with them in the near term.
We hope that you found this interesting and useful in your blockchain journey.
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