I have been fairly outspoken on this issue in the past but it seems that every week we are seeing a new ‘compliant securities token’ platform announcing the need for a new token standard — one that aims to polish off the dusty old ‘wild west’ branding on the ICO and add that little extra je ne sais quoi for their own branded global standard.
First, this idea is not new. We have seen no less than 100 solutions suggesting a pixie dust IF statement in an Ethereum smart contract that will call into another smart contract somehow capable of maintaining up to date standards for all of the securities regulations required to globally participate in the offering.
What happens if these platforms do not succeed? Most of the companies who jumped onto this ICO bandwagon in 2017 are now bankrupt or have mysteriously vanished. Many with coins or tokens that appear to have lost all liquidity and no investor relations number to call.
What we really need in the industry are open APIs for developers and community to build on top of. We need more projects with a foundation of scalable adoption, decentralization and interoperability.
At some point in the future — when Casper comes to fruition and Ethereum saves humanity from self-annihilation through proof of work — these solutions may serve a functional purpose but not in today’s market. In today’s market, we need scalability and adoption immediately.
Based on a recent statement by CFTC Chairman Giancarlo, the current decentralized financial markets could surpass $20 Trillion in 2020, that’s 19.5 Trillion USD in 21 months from today. As new companies continue to emerge need to identify opportunities to leverage the technological advancements of each other. This will enable this nascent ecosystem to better handle what will be the largest global adoption of a new technology in the history of humanity ($20T in 2 years).
For my own company, iComplyICO, we are focused on providing compliance solutions for ICO issuers, securities token platforms, and yes…traditional financial services too. Our mission — to bridge the gap and enable a global transition of wealth from traditional to decentralized markets — has helped us to create turnkey, scalable, enterprise API solutions. This includes iComplyID — a consent-enabled, zero-knowledge proof blockchain ID solution, iComplyKYC — an in depth blockchain forensics audit solution covering KYC and AML concerns related to banking for blockchain companies, and Prefacto — a open compliance protocol similar in function to Harbor’s proposed ‘Regulator Service’ which is currently only available on Ethereum through private white label.
So why did iComply not launch a security token platform? Well, first there is that whole blue ocean strategy thing which has served me well in business until now. Essentially, don’t get stuck mining in the gold rush—focus on building the critical infrastructure to enable the market to flourish.
In an era where everyone is either doing an ICO (or some new lipstick-on-a-pig rebranding of such…i.e. TGE, STO, RTO, FOMO, MOFO, or who knows what’s next) or creating a platform to automate the launch of either a security or utility token, iComply is focused on building the tools that will help this market to grow faster.
New token features and standards will come, and are welcome, but if we are going to seize the tidal wave of a $20 Trillion opportunity we need to get our act together. The incumbent financial services industry isn’t staying on the sidelines anymore, they are making plays into decentralization and the plays are going to keep getting bigger.
Only by focusing on interoperability, eliminating silos and multiple projects recreating the same computational steps for Ethereum to execute, will we enable more successful projects, better investor protection, and faster adoption of decentralized capital markets.
If anything, perhaps we need a new standard for when someone is able to use community resources on considering, developing, or adopting a new standard. However, if we can accomplish that we might as well just solve world peace while we are at it.
Either way, if you like what we are doing at iComplyICO we would love to collaborate with you on releasing scalable, open infrastructure that will help to bridge the gap between traditional assets and decentralized financial markets.
Matthew Unger is CEO of iComplyICO, the world’s first automated compliance protocol that enables ICO issuers, security token platforms, and investors to both launch and trade coins or tokens in compliance with global securities, identity, and privacy regulations.
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Any opinions or recommendations expressed herein do not necessarily reflect those of iComply Investor Service Inc. iComplyICO and its affiliates do not offer accounting, tax, legal, or compliance advice, services, or opinions. This material is not intended to provide, and should not be relied on for, tax, legal or accounting advice and has been provided for informational purposes only. You should consult your own tax, legal, compliance, and accounting advisors before engaging in any transaction. ‘Prefacto’, ‘iComply’, ‘iComplyID’, ‘Compliance Rehabilitation’, and ‘iComplyICO’ are copyright and trademark of iComply Investor Services Inc.