In-depth analysis of the STO industry in the U.S.|Digital Security Frontier Vision #1
Welcome to Digital Security Frontier Vision: The Voice of the Core Builders from Global Digital Security Industry #1
This interview was published in January , 2019 in China. Last year we are pleased having JUAN M.HERNANDEZ as our interview guest for Digital Security Frontier Vision#1，And now we also want to share this interview here.
1、How many security token compliance exchanges are regulated in the United States? Will it continue to increase?
Currently, the OFN ATS is the only operational platform to trade security tokens. There are a number of others working on building their own, but we have a large head start since we started the process over a year ago. Due to the larger barrier to entry imposed by regulation, there will be many less platforms than in the unregulated world. Just like how the public equity markets exist today, we think there will be 4–5 large security token platforms as the key players.
2、I know you have got ATS license plate, how difficult is the application of this license plate？
Many other platforms went out and purchased an existing license, but OFN was the first the built it from scratch in order to trade Digital Securities, specifically security tokens. We started the process over a year ago, and have worked around the clock to be able to be the very first to launch. While the regulators have been very receptive and open to working with us, both sides are proceeding with caution because it has never been done before.
3、What companies are willing to do STO? How many projects want to go through your exchange via STO? What percentage of American programs? What is the proportion of foreign projects?
We have seen a huge demand already for people to list on the platform.
Between our 18+ issuance platform partners, and those coming direct to us, we have spoken to about 200+ unique projects. We think that by the end of next year we can have 100 trading if the ecosystem continues to develop. The interest has been global, with projects coming out of all different countries. While the early ones will be mostly US, we are seeing more and more companies looking to list on a US platform that are not located here. Since we are set up to trade with customers from all over the world, we accept projects using US regulated tokens from anywhere.
4、How do you see STO? Is it going to be a trend?
The alternative asset market is currently $7.7T, and new issuances of private securities at about $1.8B. By creating additional liquidity for these markets, we can start to eliminate all the inefficiencies in the market and increase demand for these assets. There will be strong desire for both new companies looking to raise money doing an STO, and existing assets such as REITs looking to tokenize and increase liquidity for their investors.
5、How do US institutions and businesses view STO?
Some of the largest companies in the traditional markets have started to get into security tokens. Goldman Sach’s Circle purchased Poloniex and is looking to create a security token marketplace. And Fidelity, with $6.7T under administration, just opened Fidelity Digital, looking to get into security tokens. Large companies are very, very interested because security tokens are seen as more ‘legit’ than unregulated tokens, and they can buy them since they are regulated, and they wont risk losing their own licensing.
6、If a project party wants to go public from OpenFinance, what qualifications does it need? How hard is it to get on the exchange? How much will it cost?
We evaluate all projects in a few ways while listing. We are open to all kinds of projects, from art work, to tech companies, to real estate, to Hedge fund equity. We do a compliance check, and make sure that you raised money in a proper way. Then, for the technical integration, we want to make sure that the tokens have the compliance checks built in or accounted for at the token level.
This is done to make sure that once they leave OFN, they can‘t be traded on a non regulated platform like EtherDelta or similar. If you look at our own library, S3, it is an example of what security tokens should look like. We have many other accepted standards, such as DS, R-Token, ST-20, CAT-20, DSS, 1404, Abacus, and are working on more.
7、Please announce the detailed steps of STO in OpenFinance. When will OpenFinance go online? What is your plan next?
We have launched already, and currently have trading live to a limited user base. As more and more tokens are ready to list on the platform, we will open up the platform to all users globally. We are currently working on developing new tech that will allow us to capture users from the traditional market, as well as compete against all the major players coming into the security token market. Our next big product is custody solution that will leverage the security of DEX’s while still being as performant as their centralized counterparts. This, along with our APIs will allow us to be attractive to large institutional traders, and create a platform that can rival NASDAQ.
Thank you for the interview!
- Check Chinese version of this interview here
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