Sign Banking Form Oregon Secure

Industry sign banking oregon form secure

[Music] this is Amy Wan reporting from the start engine Summit out here in LA and I'm here with Steve namekian Stephen can you make a quick introduction of yourself sure I'm Stephen McKeon I'm the chief strategy officer at security token Academy I teach at University of Oregon I'm a partner collaborative fund so I wear a lot of hats in the space you some more nuanced questions about the security towing industry I think a lot of people haven't quite thought about yet let's talk about public and private blockchains right so that the security token industry there's a lot of laws a lot of regulation involved and I think there's this increasing inquiry as to whether it's better to have these security tokens issued on a public or private blockchain can you sort of review the pros and cons on both and what you think the future will be sure I'd be happy to this is a question I get a lot I am I mean as I've stated previously I am an advocate for public chains and and the reason is because I think the open-source is really powerful in terms of getting lots of people to build on top of it and so if you look at what prompted like the ICL boom in 2017 that largely was driven by the ERC 20 standard on aetherium right so it created a standard that allowed for interoperability allowed all the wallets to custody the new assets that were being created it allowed sort of a lot of people to buy into a common standard because it was going to just automatically work with all the previous infrastructure that had been built now the advocates for private chains will often point to the fact that financial industry is heavily regulated and privacy is really important and I actually I really sympathize with those arguments I think that full transparency sort of like what we have with aetherium is going to be difficult in the long run in terms of you seen this this space scale in financial securities people do not want other participants seen what they're holding they do not want other participants seen their trades and so they're gonna have to be privacy solutions maybe that looks something like CK snarks or Stark where or maybe some implementation of memo Wimble there are privacy solutions that we could integrate onto public chains but I think those are kind of the points of tension fantastic you know a lot of the current securities industry is literally written into laws and regulations transfer agents custodians things of that sort and you know sometimes when I talk to people in the SEO industry they kind of wish we could just start from scratch and get rid of it do you have any thoughts about that I mean I think we are starting from scratch to some degree in the sense that it is a parallel system that is being built and it will collapse some of those layers down it probably won't collapse all of them I think self custody is going to be important but I think there going to be some investors that don't necessarily want to self custody certain institutional for investors for example really need a custody solution like just from a legal standpoint and from a fiduciary standpoint and so I think it is gonna collapse the system relative to the way we trade securities now but I think you're gonna see some mapping of some of those pieces into the crypto landscape do you think the traditional or current roles of for example custodians and transfer agents is going to evolve or shift at all because with STO industry yeah I mean if you look at the if you look at what transfer agents do in traditional securities I mean I think that that function is going to be performed more by sort of a compliance platform like a harbor or a secure a tie is a polymath those sorts of groups are probably going to perform that function of kind of keeping track of the cap table and the various functions moving the Reg D through rule 144 and taking the legend off I think that'll be performed by these platforms so again I think the idea is like some of these things are just going to get collapsed into a more efficient version in crypto I saw a very interesting question on Twitter the other day someone asked hey if I am holding my own security token well I lost my private keys what's going to happen and in the in the SEO industry it's interesting because you actually have AML kyc so what's your answer to that question I think in order for the security token industry to scale there's gonna have to be canceled and reissue features and I understand fully that that sort of goes against the immutability aspects that we appreciate a really value in the currencies like Bitcoin but the issues that these are regulated securities so there's a little bit of a different animal it's unclear whether that will be performed by the compliance platforms or whether they're going to want to outsource that service it's possible they want to outsource it to a third party maybe sage wise they'll be interested in in that aspect but yeah I think there is gonna need to be some form of key recovery and a process around that because like let's face it as soon as you open a key recovery mechanism like that is another attack vector for hackers and so the way in which that's executed needs to be done very carefully you know right now outside of the US there's still a lot of icos happening and they're all playing regulatory arbitrage and you have the US SEC which has taken a very particular stance on regulation of tokens right and so I often hear some concerns around while we're stifling innovation we're you know there's gonna be brain drain from the US there's gonna be less innovation here we're pushing the financial services industry away from the u.s. do you have any comments around that yeah I mean this is a topic I've thought about a lot because I was involved in the commercial drone industry before crypto and we went through it was also like a regulatory issue we went through all of these same comments right the idea was like commercial drones were illegal in the US we were literally witnessing a brain drain projects were moving to Canada they were moving to Europe they were moving to Africa they were moving to places where the regulation wasn't going to stifle what they are trying to do and eventually the FA consulted industry experts they came up with some thoughtful regulation it was called part 107 I don't think the SEC has been stifling to the same degree right so they're actually I mean if you look at the enforcement actions they have been pretty targeted they haven't made sort of like industry-wide proclamations that are binding anyway and so I think the jury's still out I think some increased regulatory clarity would actually be welcomed at this point fantastic well we're approaching the end of the year so do you have any specific wishes for how you want the industry to evolve in 2019 yeah I mean I think the big piece right now is the buy side I think the the supply side in terms of security tokens is pretty robust there's a lot of issuers that are interested in generating liquidity there's a lot of issues in in every asset class right and fixed income in real estate early-stage equity I think the important part is developing the buy side most crypto investors are looking for venture like returns so they may be less interested in in in real estate although I think they should be is a sort of finance professor and we like to talk about diversifying portfolios but you look at a lot of the traditional real estate investors they're not yet comfortable with with the platform's digital wallets and so on so I think bridging that gap is gonna be the big effort over the next 12 to 24 months fantastic thank you so much for joining us - absolutely thanks for having me this is Amy Wong from start some in LA [Music] you [Music]