[09/10 Virtual Event] CryptoMondays: Security Tokens, Regulations And International Jurisdictions
Join us virtually and get 1st hand insights from the comfort of your own choosing. The event was broadcasted LIVE from 5:30PM to 8:30PM, September 10, 2018 (PT).
Panel Discussion: “ICOs, The Next Chapter – Regulations, Security Tokens, VCs And What’s Next”
Learn from the experts about their opinions on the utility tokens market, liquidity of security tokens and about the current state of the crypto market in general.
More topics covered:
1) How are SAFTs taxed?
2) Jurisdictions – Should you reincorporate in the Cayman’s, Malta, Singapore, BVI, Puerto Rico or somewhere besides the US?
3) What about the SAFTE or other structures?
4) Other tax strategies like Foundation issuing ICOs or Consortiums
Best Quotes from John Wu:
“..we are [Sharespost Digital Assets Group] trying to build a secondary marketplace for security tokens. Why? When you track the number of primary issuances of security tokens – those have been done early this year, maybe late 2017, so it means in 2019 you still have a lot of these security tokens and need to find a place for liquidity. And so I think the market for security tokens is going to start to grow naturally in 2019...
“I think the types of assets and securities that are well to be tokenized are ones that need to be fractionalized, the ones I can get more access to investors following a global perspective, things are illiquid like a real estate asset that want more liquid investment terms. And with the tokenization, you create more transparency in the process and therefore you have more efficiency and you cut a lot of costs out of raising money …”
Best Quotes from Timo Lehes:
“My take on it is that utility tokens are not dead at all. All these pessimistic topics of a discussion are a very US-centric way of looking at thing internationally it is not a case. The US market situation right now is that you have Coinbase that allows you to trade in the retail wallet, e.i. BTC and Ethereum, which are exactly in line with what the SCC called OK cryptocurrencies to be trading in a non-securities environment. Everything else is in the unknown. So from that point of view, the utility token in the U.S. is still hinging on the future signal from the SCC as to how these things are going to be handled”
“We saw tekonization as a democratization of finance because you have all these high yield products that are only available to institutional investors out there and by the time they reach the retail investors there are so many layers of fees that the returns are deteriorated to something that isn’t that interesting anymore so we saw that if we can remove most of the middleman in that equation that would be valuable”
“… I see a combination: the market infrastructure coming in place for security tokens but also the inflow of other types of investors, non-crypto investors coming into the investing to tokens”
Best Quotes from Carlo Las Marias:
“So the reason why we set up an entity Malta is there are very clear concepts in Malta they just propose in powering past what’s called the virtual financial assets bill which creates distinguishes between virtual currencies, security tokens, and utility tokens. So that’s a concept that’s not only in Malta but also in Switzerland even in the EU and in Singapore as well. They have this clear market framework for operating within the space. And that’s why as a startup whereas we want to get our products out to market more quickly with the regulatory uncertainty in the U.S. is very challenging.. And one of the other benefits for them as well as they give you a 12-month window to be compliant”
“…one of the reasons we didn’t pursue Gibraltar is with Brexit looming over your Gibraltar potential we may fall out of the EU”
“… for example with setting up bank accounts, we found that even in Singapore that’s become an increasing challenge. The banks just don’t want to open accounts for companies involved in the space. Whereas in Malta with the regulations coming out there are banks who are willing to support the economy of the market.
“I think overseas markets, in Asia, for example, I think there’s still a lot of capital out there. So there are other pockets of capital that still being available for promising good technologies companies”
Best Quotes from Larry Kane:
“So if you’re going out with a token to raise money from investors and like an IPO, you’re raising it from investors for security purposes you would do with regular securities. SCC is going to classify that as a security. If you have a decentralized network like Ethereum, that is the utility”.
“There are two ways to sell securities: one is to register them which is very expensive through an S-1 or Reg A+ or find an exemption through like Reg D which is the most common exemption and if you sell restricted security in the United States you have that one year lockup which is why you’re not seeing a lot of trading of those because they’re locked up for resale”
“We’re still doing SAFTs. It has a path to the utility or securities compliance. We can get those closed.. We believe the CFT has some tax issues. So we don’t recommend the CFTs. So CFT is again an investment that would convert into a token. It can also convert into an equity Series A or some other type of equity financing. We believe that there are some tax significant tax issues with the CFT so we don’t recommend the safety”
“But generally, when a company sells a token in the United States it’s taxable income as your sole property. So the IRS deems token this property such as you sold widgets or some other products. If you don’t mind offers of tokens in the United States you have one of many hours of income and have to pay income tax on it”
Profiles of Speakers:
- John Wu, CEO, Sharespost Digital Assets Group
- Timo Lehes, CIO, Swarm.fund
- Larry Kane, Partner Orrick
- Carlo Las Marias, Co-Founder CoinAlpha
- Moderated by Mark Friedler, CEO, Gigex
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