Morning Breakout February 15, 2018
The early hour didn’t bother the diverse audience of professionals attending FinTank’s inaugural Cryptocon 2018.The large classroom quickly filled with participants eager to learn from a recent ICO issuers and trusted advisor service providers relate experiences launching Initial Coin Offerings (ICOs). The message was clear. ICOs are in the early days. The absence of clarity in this rapidly emerging marketplace requires more advice from multiple advisors to navigate through the confusion and ambiguity.
Blockchain technology and commitment to banking decentralization raise a host of questions and pose a series of untested issues associated with conversion of data into wealth. At present, institutions and the associated governance authorities have not reached consensus. Their current positions reflect an array of different states of understanding and appetite for enforcement.
Brent Traidman, BRD
The conversation kicked off with insider advice from Brent Traidman, Chief Revenue Officer of BRD. With a successful ICO launch under his belt, Traidman covered pre-offering dos and don’ts. He explained utility tokens and the corresponding implications and key tasks they entail post funding. In BRD’s case, the Switzerland-based parent company created its utility-based token through a subsidiary in the Cayman Islands.
BRD’s journey averted many potential pitfalls in part due to the team’s disciplined outreach sales and social media experience working for several digital startups. Traidman’s technical communication skills helped him connect to a wide range of advisors globally and compare the input. BRD chose to work with the top and most experienced advisors and pay the higher costs upfront. Crowdfunding token investors, primarily in Asia, followed from a very limited, highly targeted PR campaign.
Matt Wolf, Antonym
Matt Wolf, the founder of Chicago-based Antonym continued the conversation. Not only is Antonym the first vertically integrated support service agency, they are also investors in the ICO market. They leveraged their experience investing in the space to recognize, and then extend and package, a set of core services that were missing in the marketplace. Antonym offers a turnkey approach to help aspiring token issuers put together the marketing and exchange based services necessary to support both investors and token buyers.
Fred Han, Elastos
Fred Han, the founder of China’s Elastos provided a very different perspective. Given the difference of services, as well as regulatory responses to the growing coin/token market, Han discussed how some of the key players in China made their fortunes. He described his path to funding Elastos by appealing to the nature of early investors and leaders that helped build and produce Bitcoin.
Elastos is viewed as the first decentralized P2P infrastructure in China and hopes to help users of its network to turn data assets into wealth. Han’s academic background in quantum physics led him to understand the entropy in decentralized networks as key to the success of blockchain. Today, his work at Columbia University is helping students find more practical applications and extension of blockchain to digital rights.
Jonathan Turnham, Travers Thorp Alberga
Jonathan Turnham, discussed his experience helping BRD realize their token. He walked the team through the series of steps taken for the subsidiary token company to meet the standards for operation in Cayman Islands. He explained that hedge funds and corporations choose this offshore jurisdiction in part due to its strict corporate veil rules, based on 1950s UK common law. This makes creation of new subsidiaries easier and more affordable. He highlighted the essentials and summed up with a relevant financial business test checklist, a must-have guide for entrepreneurs.
Barbara Wolf, Greenberg & Tarig
Barbara Wolf, the Los Angeles-based corporate and securities lawyer leads Greenberg & Taurig’s interdisciplinary task force on blockchain and ICOs. Referencing SEC Jay Claytons remark that he’s never seen a token that wasn’t a security, Barbara acknowledged the number of pure utility tokens like BRD.
It drove home the message that a high degree of uncertainty and confusion among U.S. regulators will remain for some time. Tests such as Howey and others provide some pathways, but don’t uniformly satisfy U.S. regulators, resolve overlapping jurisdictions, choices, or address variation in law enforcement at both the state and federal level. Wolf’s closing comments suggest that best practices will continue to merge and suggests that entrepreneurs remember that form takes precedence over substance when it comes to choosing your structures.
Thanks to Kim Wolfson, Women in FinTech Initiative Chair Woman and program manager for the ICO session, for helping organize and facilitate this morning’s informative interactive presentation.
