Recap from OST LIVE with Brian Lio, CEO at Smith + Crown — Trends in Blockchain
Brian Lio, CEO of Smith + Crown, a blockchain research and consulting group, joined us on Episode 51 of OST LIVE to discuss trends in the cryptocurrency market, insights from the Chamber of Digital Commerce Token Alliance, and thoughts on government intervention on blockchain-based projects.
Crypto Market Trends
Over the past couple of years, there has been an acceleration in the rate of development for blockchain. Innovative technologies are being implemented across a wide variety of industries and there has been a lot of excitement over tech that isn’t fully developed yet. The crypto market has been on a downturn this year, and the hype that we saw last year is settling down. Each individual industry is adopting, implementing, and developing on blockchain. Lio believes that because each industry has a different adoption curve, the global market cap is irrelevant to someone who’s employing these technologies. Large organizations are exploring how blockchain technologies can disrupt, augment, enhance, and change the manner in which they conduct business. They are starting to acknowledge that although there has been hype around blockchain, they see the core promise that it can provide.
Landscape for Projects Raising Funds
Initially, there was an explosion of token sales. It was exciting because it opened up participation and the ability to rapidly build communities. Securities laws are catching up to the fundraising mechanisms seen in ICOs. Lio believes there was a big misunderstanding around the intentionality of people that were raising money via blockchain projects. On one side, there was a perception that people thought of blockchain technology and tokens as a clever way to circumvent securities laws. On the other side, people saw this as a novel technology solving governance problems, but they themselves had no idea what a security was. This created a disconnect between people focused on innovation and people who saw this as a direct attack on the financial space. This resulted in the laws that we have in place, catching up with current technology.
Projects have returned to raising funds more traditionally with private rounds, equity deals, networks of known colleagues, private channels, and securities offerings. People are still just as excited about blockchain, but the risks that’ll they take, the projects they’ll invest in, and the structure of the deals have changed dramatically. There are also many different jurisdictions that are looking at this and trying to find interesting ways to allow for creative innovation while still having protections in place.
Chamber of Digital Commerce Token Alliance
Smith + Crown is the Chief Research Advisor for the Chamber of Digital Commerce Token Alliance, which supports the industry by providing research that has meaningful impact. The goal is to have a working group that brings together industry players to discuss topics around the token ecosystem to have an educational dialogue. The alliance’s recently released report provides best practices for tokens and token sales. The report looks at trends, current laws, legal considerations, due diligence, and how to implement best practices. A lot people in the industry are learning lessons that someone else has already learned the hard way, and the alliance hopes to educate regulators and officials with a broad reference document with key insights and helpful information.
Government regulation on blockchain and cryptocurrencies has been a hot topic in many jurisdictions. “Governments will regulate financial markets and infrastructure, that’s a given” Lio says. He believes there’s an opportunity for regulation to provide commonsense protections for the people who want to participate and to pave a path for projects to be compliant. It’s an expensive process to do anything in the securities space, as it involves legal advisory and compliance. There is still more to be done so jurisdictions open up this space for innovation.
Blockchain is global. Many jurisdictions and governments are experimenting with different systems for governance, regulation, and compliance. However, blockchain provides an open network that anyone can participate in, regardless of censorship. The solution is not black or white. Rather, proper regulation should provide an environment that invites people in and provides incentives for companies to get involved.
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OST blockchain infrastructure empowers new economies for mainstream businesses and emerging DApps. OST leads development of the OpenST Protocol, a framework for tokenizing businesses. In September 2018 OST introduced the OpenST Mosaic Protocol for running meta-blockchains to scale Ethereum applications to billions of users. OST KIT is a full-stack suite of developer tools, APIs, and SDKs for managing blockchain economies. OST partners reach more than 300 million users. OST has offices in Berlin, New York, Hong Kong, and Pune. OST is backed by leading institutional equity investors including Tencent, Greycroft, Vectr Ventures, and 500 Startups.