Kriptomat AMA #5 with Luka Gubo, CEO Blocktrade
Our Ask Me Anything session with Luka Gubo was a superb insight into the world of digital securities, so we have prepared a brief overview by slicing the video into smaller sections.
DISCLAIMER: None of the things in this video is to be considered as financial advice. People in this video are simply sharing their personal opinions. Always do your own research and never invest more than you can afford to lose.
01:00 — Kriptomat introduction
09:44 — Luka Gubo introduction, What is Blocktrade doing?
Blocktrade is a secondary market for digital securities (security tokens). In Europe, there are 26 mio companies and the best majority of them rely on banks to get the capital when needed and not so much on capital markets.
The new technologies, blockchains are changing that and companies can now have a customer who is also an investor. That means they are becoming more loyal customers, and loyal customers are more vested in the project, as they are investors at the same time.
In the next years, there will be 100.000 companies that will do a security token offering, from large to small size companies.
14:19 — Digital securities is such a great and simple idea. Why didn’t it happen before?
There was no way to reach out to potential retail investors. With today’s technology, things are much easier.
20 or 50 years ago it was not so easy to reach the public and offer the investment opportunity. The only option for IPO was with investment banks because they had the process, infrastructure and knowledge. The opportunity was mostly available to big investors because they were the ones involved.
Now things are changing and small investors have access to investment opportunities and they can do it literally from home!
More information about the Kriptomat STO can be found on https://kriptomat.io/sto/
16:20 -Why would two exchanges of digital assets collaborate together?
World is very large and we are not competing at all. Blocktrade is focused on trading with digital securities and not to be a Cryptocurrency exchange. They do offer that service at the moment, but they did this only as an investment in infrastructure to be ready to support digital securities when they become operational.
Blocktrade and Kriptomat have a mutual interest in several areas and they will try to cooperate in the future.
18:25 — What types of assets will Blocktrade be listing
Blocktrade will be listing all types of transferable securities, meaning all types of equity and bonds. They are also looking in enabling different funds.
Srdan: ”What you at Blocktrade are doing is like trying to install a recuperation in a cave.”
19:53 — What is the difference of primary markets — ICO and STO?
The only similarity is that you are pitching to somebody trying to get money. Everything else is different. With digital securities, you get an actual financial instrument and that part is highly regulated.
The issuer of digital securities needs to be transparent, need to share information about the company, the people behind the company, associated risks, … while in the ICO sphere there is none of that. Just a whitepaper with a roadmap and lots of advisors.
More information on Kriptomat STO on https://kriptomat.io/sto/
25:00 — Comparing digital securities with traditional financial instruments (shares)
From a legal perspective, there are the same. The big difference is from the technical perspective where blockchain makes it much easier to track the database of investors, the transactions, reporting and the settlement makes the process much more efficient and transparent.
29:40 — Will secondary markets like Blocktrade be connected and share the data between themselves? Is there a standard coming into place?
It is not yet happening and it does make sense. The part with settlements is expected to happen on blockchains and will be disrupted in the future.
31:15 — Compare the traditional stock market with Blocktrade. How is the process?
What part do the brokers play? The entire process is pretty much the same and there are all the same things happening in the background. Using solutions like Blocktrade it will make the process much more simple and user-friendly.
38:00 — Blocktrade enables people globally to participate in investments in business from other regions and be confident that the company complies with the regulations and trust the i.e. EU laws.
EU has a strict regulatory framework and that means that the standard is the highest possible.
More information on Kriptomat STO on https://kriptomat.io/sto/
40:00 — Where is Blocktrade incorporated and why? How far are you with the MiFID II license (Markets in Financial Instruments Directive)?
Blocktrade is a company from Lichtenstein and country is a member of EEA (European Economic Area).
The discussions with regulators have started in February 2018 and there are already more than 700 pages of documentation. As Blockrade is trying to get the fully regulated license it takes so much longer. It is hard to give a time estimate as they are one of the first ones on the market.
There are some other companies trying to get licensed, but there is not so much happening yet.
47:00 — Decentralization and risk distribution
How cryptocurrency exchanges like Binance are one of the most centralized services on the world as they are acting as an exchange, custodian, broker and even offering a service of IEO (Initial Exchange Offering). It took decades to develop a legal framework and system to decentralize the process and distribute the risk.
48:50 — Can you comment on DX exchange that claims they can trade security tokens?
Here are few exchanges claiming they are a regulated exchange but that is more of a marketing thing.
50:30 — Digital securities can be described with words like “Transparency”, “Regulation”, “Security for investors” and “Less volatility “— Do you agree?
Yes! There are so many different regulations, laws and directives that govern the digital securities market and all is there so the “small” investors are protected.
Cryptocurrencies do not have any intrinsic values while digital securities value can be calculated based on the securities coming from them. Volatility can be related with the business model of the company issuing the financial instrument.
More information on Kriptomat STO on https://kriptomat.io/sto/
54:30 — How important it is to have Kriptomats digital securities with Blocktrade and what is the process?
The Kriptomat security token is prepared with all the necessary legislation and the guidelines to be listed on secondary markets like Blocktrade. Once available Kriptomat financial instrument will go through the pre-listing assessment with Blocktrade. This process is expected to be easy for Kriptomat as we are working with Desico, that is a regulated platform.
58:46 — Are there many projects approaching Blocktrade with requests to list their digital securities?
Companies that decide to make an STO are more mature and trustworthy. They are either early stage or later stage that want to connect with their customers. There not so many yet.
1:00:20 — How Kriptomat, Desico and Blocktrade makes a great example of the digital securities ecosystem
Kriptomat is issuing a digital security as it needs capital to grow and wants to build stronger relationships with its users, Desico as a regulated primary market and Blocktrade as a regulated secondary market.
01:03:30 — What will be the total supply of Kriptomat tokens?
There are many things that can be tokenized so it is hard to tell if there will be new securities issued.
When talking about delusion, there will be 18 mio tokens issued in the first offering. Kriptomat is raising funds to grow. So if in a later stage we decide to issue more tokens to grow further, the dividends coming from Kriptomat’s securities is expected to be bigger and the value of the digital securities is expected to grow as well.
It is done the same way as in the traditional financial markets — series A, series B, … with every round previous investor gets diluted.
More information about the Kriptomat STO can be found on https://kriptomat.io/sto/
01:10:00 Closing remarks
