Welcome to Digital Security Frontier Vision: The Voice of the Core Builders from Global Digital Security Industry #22.
Philipp Pieper，Co-Founder and Council Member of SWARM. He has held various private equity and management positions at Deutsche Bank and Allianz Group. Philipp is a serial tech entrepreneur and discovered Blockchain after an encounter with the founder of BitTorrent.
Today Philipp is talking with us about SWARM’s free tokenization tools and how to lower the barriers to entry STO.
Enjoy the Interview!
Q：Compared to other security token issuance platforms, what is the biggest advantage of SWARM?
A：Each security token platform approaches the STO space from its own angle. SWARM provides open and free infrastructure for the entire lifecycle of security tokens.
SWARM empowers issuers to :
1/ configure their token, from the set-up to capital raise to their specifications;
2/ implement, manage and enforce their compliance requirements;
3/ manage the interaction, information sharing, and governance with their investor base. This model allows issuers to allocate their budget and bandwidth as they see fit on legal, marketing, and whatever else they deem necessary to run a successful STO. Additionally, we offer an onboarding solution that integrates as a white-lable application into the issuer’s fundraising portal, and allows investors to perform or reuse KYC and other required investor qualifications in order to invest. This reduces friction along the entire process.
Q：Recently, we heard the good news about SWARM announcing the launch of a new platform, which available services include compliant fundraising and security token issuance for free. This is big news for the whole industry. Why does SWARM provide services for free?
A：It’s not just because we can — or that as a non-profit have been mandated to do so. More importantly, we believe that tokenization should be open and commoditized. That way, more issuers can trial the concept of tokenization, and the full potential of efficiency gains resulting from the blockchain and open infrastructure can be leveraged. At SWARM we think it’s more important to create vested market participants, and have created that with a staking process, where instead of charging for infrastructure and tools, issuers simply stake a small percentage relative to the assets they operate on the network. By lowering the barriers to entry, we enable more issuers and investors to take part in the opportunity that security tokens offer.
Q：Does This unique model of providing no upfront costs and free issuance attracted many STO Issuers?
A：Very much so! We have scores of issuers reach out to us interested to build their STOs on top of SWARM’s tools and platform.
Q：What are the main parts involved in the free service? Which part start charging?
A：The technology and tools for token configuration, common compliance measures, onboarding, and white-label fundraising fall within the free use with staking for issuance model.
Any custom solutions, premium services, or 3rd party dependencies (such as custody or fiat gateway) will likely require other engagement models, onboarding and therefore fees. We encourage any 3rd party to recognize this opportunity and create paid services on top of SWARM for the benefit of the network participants.
Q：We have seen excellent STOs like Resolute.Fund. What types of projects does SWARM tend to work with?
A：SWARM’s goal is to provide the tools to digitize any asset imaginable. So far, our experienced team and institutional-grade partners have attracted professional asset managers with years of successful performance who are ready to uplevel their offerings with the benefits that distributed ledger technology provides.
Many understand STOs to be mainly crowdfunding. We are seeing the bigger opportunity in replicating existing asset classes and investor engagement onto the blockchain, therefore running more cost-effective with higher reach and at a higher degree of regulatory compliance than in traditional markets. That’s where we predict a lot of the adoption and volume will come from.
Q：What factors do you think need to be considered when an issuer chooses an issuance platform?
A：SWARM provides everything an issuer needs to mint a regulatory compliant security token to their specifications without fees, freeing up the issuer’s budget for non-negotiables like legal guidance and marketing. Other platforms seek to function as a one-stop-shop providing tokenization and various ancillary services at a premium. Issuers should consider their own budget and bandwidth as well as the track record the issuance platform and its leadership team before settling on the right one for them.
Another criteria is flexibility and future-proofness. While issuers are not technologists, it’s immensely hard for anyone to predict which will be the winning infrastructures and which players are the ones that will be the best choice down the road. When we introduced a blockchain agnostic approach — where issuers can deploy on any chain (and in future can run one digital asset across different chains) we heard many sighs of relief. Our approach meant they didn’t have to answer the question of where the best liquidity or security may be in the future. Instead, they can react to it when the time comes and with higher confidence
Q：Many people think that STO’s problem is shortage of liquidity, What is your opinion?
A：Liquidity is not the only issue, but certainly a key to the security token value proposition. As much as there have been a number of well-financed projects trying to tackle that at scale, the reality is that the regulators are taking their time to figure out how to best apply existing financial market regulation onto this new market with huge potential.
What we’re observing, however, is one jurisdiction at a time seeing the benefits of digitizing assets, maybe even following the rationale that blockchain-based markets, when done right, not only serves the issuers and investors but also can lead to a higher quality and auditability for regulators. The market will look very different within this year.
That said, good markets need good assets to be attractive. So while the secondary markets are in development, the primary issuances have just reached a sophistication of tools and components that attract issuers with a larger size, higher credibility, and better quality of execution. Step by step, STO by STO, we will see more assets, that will attract investors and open up these markets.
Q：What does SWARM think of the Asia market?
A：SWARM’s free tokenization tools allow issuers to configure their security token offering to comply with any regulations, and to do so without the traditional barrier of costly fees. We’ve designed our tools to be applied globally, so we are working with different partners across the region to adopt them for the local markets.
While that is underway, select Asian markets are working hard to answer regulatory questions around the issuance and trading of security tokens. This is very exciting and we are keeping a close eye on these developments.
Q：What is SWARM’s next plan?
A：SWARM will be releasing its self-service tokenization tool in the next couple months, allowing any issuer to run a regulatory compliant STO from start to finish all on their own. Look out for this and for updates regarding the ongoing growth and evolution of our SWARM Masternode Network.
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