Crypto founders are going out of their way when it comes to ensuring that their token classifies as a utility token. The fear of being regulated and having the government peek into their beloved project makes them shiver. In their opinion being regulated equals mountains of work to be done and keeping up with ever-stricter compliance guidelines. But is this really something to be afraid of or is regulation something that will be able to bring some much-needed stability to the volatile sea that is the crypto market? Does London need some Dutch courage when it comes to tokenization?
Off course there are many projects that thrive well on a utility, but let's face it from last December the top 100 listed ICO’s dropped an astonishing 90% of value in total with investors seeing their investments evaporate if not disappear in their entirety. HODL (Crypto slang for Hold On for Dear Life) has become a trend word that if used as a motto could sink one’s entire investment capital especially with pumps and dumps combined with large shorts getting more common. Just look at the market in the last week. The sea is rough enough to scare any sane seasoned captain. But, as the saying goes: “Remember, rough seas make great captains.”
For our own project here in Holland, we have been working on a way to turn the tide not only to launch a more stable token but also put real value underneath it. And yes, as sure as the sun rises in the east, we did run into the financial regulators instantly. We consider this a good thing. Our vision for the market is to skip the STO (Security Token Offering) strategy in its entirety and launch a full ETO (Equity Token Offering) instead. Creating the first fully regulated token that is in full compliance with the regulatory offices and backed by the bricks and mortar of the company. The tokens will offer full dividend rights, voting and meeting rights and in the future even a tender offer system that notifies the shareholders directly via their wallet. We believe that regulations are an opportunity to create a somewhat calmer market, which could even be used as a hedge against normal crypto volatility.
Given that the first publicly tradeable share, as we know it, was originally invented in Amsterdam in 1602 by the VOC we feel it is almost our duty to set the pace once again! Where the old version powered and funded de Ruyter and our fleets of ships to go global, this time we look to have all hands on deck to push the boundaries in such a way it benefits entrepreneurs equally, creates opportunity and spreads the crypto fever.
Just like any new route, we will run into obstacles, rough seas, and navigational issues. We figured that it’s only fair to share this knowledge with our fellow crypto captains and pirates alike. Our objective? To structure our company in such a way that we turn our corporate stock into an official regulated stock. Then issue tokens that will tradeable on regulated exchanges like Chaintip.io or the new crypto assets exchange the Singapore regulators are building. The route, contracts, and all other legal documents will be open-sourced on our GitHub, so everyone can use them as a map to set sail to this calmer sea.
Together with Liqwith.io, we managed to solve the most pressing problems. Liqwith.io offers us the technology to manage our shareholders, tokenize the shares and a solid legal base to start this project. As this method is still in its infancy, we also invited our own lawyers to take aim and have a go at it. Basically what it boils down to is to create enough shares in a holding company, certify those shares and put them into a trust office foundation that is owned by the shareholders, in the foundation put a blockchain on top that acts as a shareholders register, ensure the smart-contracts for the tokens take care of the dividend and voting rights and sell them to investors.
This approach gives some benefits over regular shareholder ownership. For the start-up, it makes dealing with shareholders, votes, dividends, and communications less of a drag. It saves a ton in legal costs as this is replaced by the Blockchain and opens the way to onboard smaller investors as well. For shareholders it simplifies life; they receive dividends directly in their ETH wallets with messages, votes and meeting notifications being received in the same way.
I want to personally call on the sector to create their own innovative mechanisms to deal with lack of regulation, whether you are an investor who wants to learn more about new funding methods, an entrepreneur who is looking for funding or an investment bank who is afraid we will sink your fleet of existing investment strategies. I believe there is enough Dutch courage to go around. London just might jump ship and set sail to discover exciting new lands.
Important Information: The views and opinions provided by City A.M.'s CryptO Insider are of those named in the article and should not be taken as investment advice. This communication is marketing material.