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Exclusive: Is Belarus the Heaven for Tokenized Exchanges?

Exclusive interview with George Paliani

In this interview with George Paliani, CBDO of Currency.com, we explored the fundamentals of the tokenization of assets and its underlying regulatory requirements. George explained that Currency.com is not just an ordinary exchange, where it is a platform with cryptocurrencies and traditional financial products such as commodities, indices, stocks, bonds. He then explained the key differences between security tokens and tokenized securities and the significance of “Decree No. 8” in conducting crypto-related business in Belarus.

What are the differences between security tokens and tokenized securities?

To understand the difference, you must be able to differentiate between traditional securities and security tokens. Security tokens represent tokens that have gone through security token offerings, as they have tokenized their assets. Each security token can represent partial ownership of a particular asset. We don’t list these tokens; we list traditional securities found in the traditional financial markets. We only list traditional assets from the financial markets that already exist and have done an IPO.

Tokenized securities, for example, Tesla shares, can be traded on the traditional financial markets. At Currency.com, we have tokenized it and put it on our platform. Not only can you trade cryptocurrencies on our platform, but many tokenized shares can also be traded on our platform as well. We offer our clients to trade traditional financial assets.

Users on Currency.com can use Bitcoin and Ether to purchase tokenized securities. How do you address the volatility concerns of these two cryptos?

We genuinely understand that volatility is a huge issue in the cryptocurrency markets. We solve this by a process by having our own version of stablecoins. Therefore, the funds deposited into your account from the bank will be the exact sum you will find in the Currency.com wallet, enhancing the trading process and user experience.

How does Currency.com compare to other competitors in the market?

One of the significant advantages that we have is regarding regulation. We are a fully licensed exchange, regulated by law and the government, audited by a big 4; we are entirely transparent about this with our users and the government.

We also offer margin trading with leverage of up to 100x, which is unique in this market. It is an option that we provide, and for professional traders, it is a very manageable risk.

Which regulatory approvals have been obtained to become the first regulated tokenized exchange?

We are a European regulated exchange, under the Decree No.8, which was issued in Belarus in December 2017. Being regulated, it allows us to operate in a completely transparent regulatory space. There is an ongoing development in the legal and regulatory space as they are adding more laws and decrees in Belarus; we consider it one of the best legal space to work in the twenty-first century.

Currency.com excluded the USA and the jurisdictions on the FATF list for 1000 tokenized securities to both private and institutional investors. What are the regulatory reasons behind this move?

We do not work with the FATF blacklist, not with the FATF countries. And we do not work with the US for the reason that for the financial activities related to crypto it is obligatory to get the MTL in the several states as well as the approval from the United States Securities and Exchange Commission (SEC).

Currency.com recently issued Belarusian government bonds, is it because of the special regulatory environment in Belarus? Which country’s government bonds will be the next?

Issuing the Belarusian government bonds was the first step as an experiment for us, as they were the first to be issued on our exchange. We have already offered this service to several counterparties, under an NDA. You will be able to see shortly that other bonds will also be on our platform available for traders.

Due to its success, subsequently, we have access to tokenize government bond number 252 with up to 4.2% per annum yield to maturity. The tokens will be denominated in USD, and each token is worth $1000. It can be reinvested into more bonds or other products on the platform and users that have purchased a whole token can request a transfer of the corresponding physical bond at any time.

As you mentioned, Belarus introduced “Decree No.8” last year to promote crypto-related business. How does Currency.com accommodate to this new regulation?

I would say that it is one of the strictest decrees that I have ever encountered. When you enter the Currency.com website to begin trading, you will need to follow the KYC instructions and procedures, as one of the most critical requirements. Necessary personal information would be required, such as your ID or passport as well as your proof of address; this process can be done in under five minutes.

AML, KYC procedures are all regulated and are under Decree No. 8. It is one of the most transparent and strictest decrees I have come across, which makes us one of the most transparent and regulated exchanges in the world. The authors who have written this decree, have extensive experience and are experts in the field.

First Ever Blockchain-Based IPO Launches on National Stock Exchange

MERJ Exchange, the national stock exchange of Seychelles had previously announced a partnership with a UK-based fintech firm, Globacap to issue tokenized securities available on the MERJ exchange platform. MERJ Exchange became the first national stock exchange to list tokenized securities. The exchange is now launching an IPO of the tokens.

Globacap, founded in 2017 and based in the UK, is a blockchain fundraising firm that will also be supporting the launch. The fundraising firm was accepted into the Financial Conduct Authority’s (FCA) regulatory Sandbox Cohort 4 in 2018 and became the first company to issue a security token backed by equity under the FCA’s surveillance. Having exited the sandbox in June 2019, Globacap became the UK’s first fully regulated digital security offering platform.

The shares are available on the MERJ exchange platform as well as through broker-dealer Jumpstart and crypto custodian Prime Trust, which are both based in the US and via Globacap.

Edmond Tuohy, CEO of MERJ Exchange mentioned:

“These novel financial instruments are here to reshape the financial industry for years to come. MERJ provides the regulatory framework necessary for investors globally to access these markets in a safe and compliant manner. Whether they’re issuing tokenized or traditional shares, companies are not going to want to go to a jurisdiction that doesn’t meet high international standards because it will attract greater scrutiny from global regulators.”

Reported by CoinDesk, MERJ mentioned that it is using the Ethereum blockchain to record share register ownership as “it is the best supported protocol for these purposes.”

MERJ’s listings page shows that the tokenized security is currently trading at $2.42, with a market capitalization of $21,015,781.

Licensed by the Indian Ocean nation’s Financial Services Authority as a securities exchange, clearing agency, and securities depository (CSD), MERJ is able to host issuers from North America, Europe, Asia, Australia, and Africa.

Tuohy further mentioned that MERJ being licensed as an exchange, and CSD will help deliver on the benefits of tokenization:

“We’ve spent three years working with our regulators to build a robust and compliant framework for issuers wanting to leverage the benefits of distributed ledger technology within a publicly listed environment.”

KPMG Study Confirms US Consumers Are Ready to Use Blockchain Digital Tokens

According to the latest survey commissioned by KPMG, US consumers are more willing to use blockchain tokens. The study released this week indicates that regardless of background or age, US consumers are becoming more open to using digital currency tokens.

With advanced technology tools being applied, they become more familiarized with the use of various forms of virtual currency as a means of payment.

But what does this mean for businesses? Aplenty. Thanks to the increased adoption of blockchain technology.

Businesses are discovering new uses for tokens which can securely and accurately track the change of value across C2C, B2C, and B2B environments.

In particular, the willingness and readiness to embrace tokenization show much about consumers. In the entire recent history of technological advancements, it is the consumers who have influenced the evolution of innovation models from concept ideology to acceptance.

Consumers were the first to embrace high-speed data and e-commerce. Furthermore, it was consumers who driven the acceptance of smartphones.

Moreover, it is the consumer who is already influencing the marketing for blockchain digital tokens.

Now, let us analyze the key findings of KPMG’s recent research to understand the perceived benefits of virtual currency tokens.

Early Adopters: Generation Z

Generation Z is more accepting tokenization than any other demographic generations. 83% of U.S. citizens surveyed, ages 18 to 24, identify themselves as being interested in the use of tokens in the future. More surprisingly, over half of older Americans, – ages 65 and up – mention that they are also interested in using tokens in their business transactions.

Since consumers across generations increasingly show the willingness to accept and appreciate the use of digital tokens, the opportunities in a C2C or B2C environment seem endless.

Generation Z is a blockchain generation. This generation is characterized by people who were born after 1995. One characteristic recognized among these people is that they are immensely inclusive pragmatists. We all know that they are cryptocurrency-friendly. However, how they embrace democratic socialism, decentralization underlying blockchain tech, and new app experiences that leverage peer-to-peer commerce undoubtedly shows the future.

Easy Method of Payment

An estimate of 63% of the Americans surveyed mentioned they regard blockchain digital tokens as an easy method of paying goods and services.

Not my words, you can clearly see that generation Z is a new generation of customers. They see tokens as better than cash. Also, they see tokens as global, instant, and easy to use. The instant settlement, and near-zero fees, and no chargebacks are some of the plenty of benefits associated with tokens.

Tokens give consumers the freedom to move their money any way they want.

Tokens have stability and low-price volatility because they are pegged to major fiat currencies such as the US dollar, Pounds, or Euros. This explains the reason consumers commonly use blockchain digital tokens to facilitate the exchange of services and goods.

Stability and low-price volatility remain the key in digital currency as they ensure that sellers and buyers do not lose in a trading activity because of price fluctuations underlying in the payment instrument.

Tokens, therefore, work excellently for practical use of digital currencies involving trade activities between consumers and businesses on a blockchain network as a unit of accounting, a medium of exchange, and store of value for everyday and routine transactions of both small and large values.

As applications that make use of blockchain technology and digital tokens become more mainstream, they assist in providing global suppliers, consumers, and merchants with more secure, faster, and cheaper alternatives to wire transfers, debit cards, credit cards, and cash.

The Use of Loyalty Rewards

KPMG research indicates that approximately 55% of the respondents surveyed said tokens would enable them to make use of loyalty rewards in more meaningful ways.

Yes, I’m now talking about ‘earning’ points here.

You may have experienced grocery store rewards, hotel reward points, or ‘earning’ air miles. My assumption remains true because several points programs have been running for years, and numerous millions of consumers have benefited from them.

Various companies run reward programs to encourage consumers to buy more.

The more you earn the points, the better, and the points you ‘earn’ are stored in the company’s database.

Nowadays, you can earn tokens just like earning points from the company you’ve been transacting goods and services with.

Several consumers associate ‘loyalty’ with ‘points’ from credit cards, hotels, airlines, and others. With such programs, the connection is clear between future benefits and today’s purchase.

One airline introduced a digital loyalty program running on blockchain as a way of encouraging its clients to use their points in smaller amounts. With tokens, consumers can use the digital wallet to buy a variety of merchants like restaurants, hotels, departmental stores, and more. Also, consumers can transfer points from a particular merchant to another (e.g., an airline to a hotel) or vice versa.

Of the 1000 U.S. residents surveyed in the KPMG research, 82% revealed they are more willing to use tokens with businesses they already purchase from.

Also, 81% said they would be inclined to trust tokens they get through a loyalty system of a business. This promotes their confidence and trust in those enterprises. This also makes tokenization an instrument for business production and maintaining loyalty.

But, according to the study, now the main challenge is that there aren’t several businesses using digital tokes for rewards programs.

The survey shows that about 86% of respondents felt great loyalty to the coffee shops and restaurants they visited, as well as their banks of choice. Another 81% expressed loyalty to electronic firms, whereas 79% mentioned they were consistent customers of some media and telecom firms.

Final Thought

KMPG reveals that businesses which aren’t taking advantage of digital assets and tokenization for rewards, and don’t already have a loyalty program in place, are missing out great opportunities. By utilizing tokenization, businesses can build new forms of the value of exchange in an existing network like allowing consumers to utilize loyalty points for purchases with a variety of merchants.

The technology is in place, and the market is ready. It is time for businesses across sectors and of all sizes to embrace blockchain digital tokens and tokenization to revolutionize their business models. Otherwise, they risk being left behind.

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ASIFMA: Tokenized Securities Might Bridge the Current Mainstream Finance with the New Digital World

ASIFMA (the Asia Securities Industry & Financial Markets Associations) has availed a new whitepaper that revealsa roadmap for regulators and market participants on tokenized securities.

The paper scrutinizes the way tokenization will affect reigning financial issuers and institutions. Expressly, the issues of considerations in the various stages of the tokenized securities’ lifecycle are highlighted.

While tokenization is still in infant stages, and the magnitude of future adoption is unknown, the paper hints that tokenized securities will impact conventional finance by acting as a bridge between the new digital world and legacy finance.

The paper states: “Tokenized securities bring the benefits of blockchain into the securities lifecycle, to create innovative new financing and capital raising model that can bring efficiencies, as well as provide liquidity and compliance opportunities that are evolutionary to traditional finance.”

The paper analyzes the key elements of the tokenized security lifecycle, such as market making, advisory, portfolio management, custody, secondary trading, primary listing, distribution, issuance, and structuring. Additionally, it considers the way these processes contrast to traditional securities.

The paper also stipulates what a benign environment for tokenized securities necessitates from a tax, liquidity, technology, and regulatory perspective. Specific matters touching on tokenized securities in certain jurisdictions are also covered.

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$134 Million Deal Closed By Real Estate Company Using Blockchain in Switzerland

Switzerland has just recorded one of its first real estate tokenization and sale on the blockchain. The asset involved in this transaction is a building sitting on the prestigious Bahnhofstrasse in Zürich. This is seen to have happened in a time where the adoption of blockchain in real estates has started to heat up.

The Swiss real estate investment company BrickMarket happened to be the buyer who acquired the property. The company also issued a bond-backed crypto token, and these tokens are figuratively representation of “shares” anyone to claim rightful ownership of the building if acquired. According to the report, the crypto tokens will be for sale to people who want to cut themselves in on the earnings that would be generated from the building’s rental income and benefits from any rise in the value as well.

The company RFR, also the former owner of the property, will still retain a version of ownership after the completion of this sale. According to the terms of the agreement, RFR will receive 20% of BrickMarket’s total supply of tokens pertaining to the building. This will be in an effort to ensure that the company continues to maintain significant interest there and receive passive income from going forward.

BrickMarket revealed that this tech-based property purchase is just the beginning of much more bigger picture, which the company intends to work with as it builds a blockchain-powered real estate business that could be worth much more than $134 million.

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Are Blockchain and Tokenization the Holy Grail in Eradicating Wealth Inequality?

The vicious cycle of wealth inequality is continuously wreaking havoc across the globe as the gap between the rich and poor widens. Realistically, the vast accumulation of wealth in a few hands tends to corrupt political systems and manipulate markets worldwide. For instance, the top 1% in the US holds 42.5% of all national wealth, and similar trends are witnessed in other countries.

Blockchain and tokenization could prove to be ideal in fighting the wealth inequality challenge, as they can break the vicious cycle of wealth inequality by promoting ownership of high-performing asset classes. This will enable any person to invest and partially own lucrative assets, such as commercial real estate.

Additionally, a blockchain-based accounting system coupled with digital tokens could instigate accountability and transparency in banking channels. Through this approach, banks will be prompted to market to their clients what products to be sold based on their preferences and interests. In turn, clients will enjoy maximal commissions and returns.

Tokenizing assets

Tokenization allows for fractional asset ownership, which is ideal in tackling the wealth inequality menace. Notably, tokenizing real-world assets, such as art, real estate, and cars, will be instrumental in enabling the majority of the global populace to be part of this high-valued asset economy.

Realistically, ownership is fundamental in any thriving economy as people are presented with the chance to expand their wealth by buying and holding assets. This concept is guaranteed by tokenization.

In case of any debt, tokenization will come in handy in fractionalizing it into smaller token-tranches. Consequently, a market for these tokens can be created, enabling investors to trade them at a discount to par value in case they want to exit the investment plan.

Blockchain allows for smart contracts to be executed, whereby the agreement terms between the buyer and seller are directly written into lines of code. They can be programmed in such a way that they permit the automatic execution of ancillary provisions like a loan roll-over as this will disallow taxation at expiration.

Blockchain enables direct P2P investment

By leveraging on distributed ledger technology (DLT), direct p2p investment will be prompted between citizens and governmental investment agencies. This will guarantee transparency as all stakeholders will be in a position to know the amount of funds received, the number of bond-tokens issued, and the ultimate beneficiaries of the funds.

Mark Yusko, the CIO and CEO of investment advisory company Morgan Creek Capital Management, believes that blockchain technology is crucial in alleviating wealth inequality. He said, “The government and the elites want to have all the wealth, so they manufacture inflation and the wealth flows to the top. […] And that’s why we have the greatest wealth inequality in the history of mankind. Bitcoin helps solve that because now we can opt-out as an owner of assets from that fiat system.”

According to the World Bank, 1.7 billion people across the globe do not have accessto loans and do not have bank accounts. Through blockchain-powered cryptocurrencies, such as Bitcoin, they will be provided with financial services, and this will be instrumental in tackling wealth inequality. Blockchain and tokenization are, therefore, instrumental in eradicating wealth inequality as it is a challenge that is continuously wreaking havoc globally.

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FC Barcelona Enters the Crypto Space with Blockchain-Propelled Fan Engagement Platform

FC Barcelona, one of the most successful and envied football clubs in the world, has partnered with Chiliz, a fintech firm, in the provision of a blockchain-powered fan-engagement platform. The tokens to be offered are anticipated in the second quarter of 2020.

Over 300 million fans given more authority via blockchain

FC Barcelona has over 300 million fans globally, and they are expected to benefit from the tokenized engagement platform.

Through the partnership, FC Barcelona will benefit from the Barca Fan Tokens (BAR) created by Chiliz on its social mobile app known as Socios.com. Expressly, the BAR will enable supporters to take part in different polls and surveys about the daily activities regarding the club. For instance, they will be in a position to choose the kind of music to be played in the stadium whenever FC Barcelona scores against an opponent.

Fans will be able to purchase the BAR through an innovative procedure called Fan Token Offering (FTO). Periodically, they will be in a position to collect the BAR and Chiliz digital currency ($CHZ) for free through Token Hunt, an augmented reality feature housed by Chiliz.

The founder and CEO of Socios.com & Chiliz, Alexandre Dreyfus, noted, “We are very excited to welcome FC Barcelona to Socios.com, and even more excited to start engaging with their massive fan base around the world. With over 300 million fans worldwide, Barça’s fandom spans countries as well as cultures.”

He added, “The Club is without a doubt the most renowned and the most supported football club in the world, and we can’t wait to see their fans start to influence Club decisions. Adding FC Barcelona fans to the Socios.com global community takes us one step closer to our goal of mainstream adoption of blockchain.”

By leveraging on fans tokens, FC Barcelona seeks to propel the inclusivity of its worldwide fanbase in vital decision-making about the club.

Chiliz embraced by various football clubs

FC Barcelona becomes the ninth major team to join Chiliz’ Socios.com. Other notable clubs that have already adopted fans tokens via this platform include Italian and French footballing powerhouses Juventus and Paris Saint-Germaine, respectively.

Dreyfus acknowledged that since the fan tokens were floated in December 2019, nearly 110,000 users have joined and buying on average coins worth $20 USD.

Football clubs are not being left behind the crypto bandwagon. For instance, English Premier League heavyweights Manchester City tokenized its players via Superbloke in August 2019.

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Russia Finally Showing Signs of Embracing Digital Assets in New Bill

After successfully undergoing test period, tokenization is set to take center stage with reforms as newly proposed cryptocurrency legislation in Russia received the green light.

News has been making the roundsfrom the Central Bank of Russia on Feb. 17 as regards the finalization of a blockchaintokenization test drive with the use of platform developed by Nornickel within its regulatory sandbox. Subsequently, this has seen a proposal from the bank to modify the nation’s digital assets law to accommodate platform tokenizations.

The platform is available for use to all organizations and gives access to them to issue hybrid tokens backed by a pack of assets. The developed technology is expected to expand the scope of financing possibilities for businesses while providing new investment opportunities for its users.

Ivan Zimin, who leads CBR’s fintech division, commented that it was one of the most significant projects backed by the sandbox. Showing clear excitement about the potentials of being able to issue hybrid tokens, He believed that they could swiftly adapt to requirements from businesses and users.

Zimin commended the platforms stating that its tremendous success has seen a request by the bank to amend regulations. He also spoke on regulatory amendments, saying that, “following the results of the pilot program, the Central Bank of Russia proposed amendments for the federal bill project ‘On digital financial assets’ that are required to integrate and develop these solutions on the growing digital asset market.”

Nornickel, one of the largest mining companies in the world, was credited with the success of developing the platform. Also worth noting is the corporation’s penchants for the development of top platforms as it is responsible for initially developing the platform to tokenize palladium, with the testing phase of the digital assets trading platform commencing Dec. 19, 2019.

As previously reported by Blockchain.News, prior to this time we have seen Russia making moves to set up a better regulatory framework around cryptocurrency, we could say that the disposition of the Russian government towards cryptocurrencies remains unclear with several ministries and the central bank is alleged to be working towards agreeing to a ban on cryptocurrency. It is quite surprising to see the latest landmark being achieved.

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Blockchain Platform Owned by Russia’s Richest Man Gets Greenlight to Tokenize Air Tickets

Vladimir Potanin, arguably the richest man in Russia, has been granted permission to offer digital tokens to book air tickets, purchase metals, and transfer ski passes using his blockchain platform, Atomyze. As reported by Bloomberg on Feb. 25, the much-needed go-aheadwas given by the nation’s central bank last week based on Potanin’s urge to tokenize commodities from a consumer perspective.

Atomyze to revamp commerce

One of the primary objectives of the blockchain platform is to transform the interaction between companies and customers. Atomyze, therefore, seeks to minimize paperwork and hasten transactions.

By leveraging on distributed ledger technology (DLT), the commodities industry strives to digitize trading systems as this will guarantee reduced costs and supervision based on the optimal traceability of materials.

Potanin has been optimistic about crypto tokens as he noted that they might ultimately account for a fifth of sales made by MMC Norilsk Nickel PJSC, the globe’s largest palladium, and refined nickel producer. He, therefore, feels that they could significantly impact metals, but can be extended to other services, such as transferring ski passes and booking air tickets.

Nevertheless, Atomyze will have to get approval from the central bank to extend its scope, especially to service-oriented companies. The blockchain platform will aid the processing of individuals’ money transactions through a state-owned bank called Russian Lender Sberbank PJSC.

Russia ripe for new blockchain projects

It is speculated that Atomyze may be the stepping stone in the Russian blockchain market as it may prompt other companies to seek approval for similar projects. Potanin acknowledged that the Russian central bank took nearly four months testing Atomyze for it to be given the green light. He added, “Our project is of great importance for the economy because the easier new products are offered, the faster they are produced.”

Last week Blockchain.News revealed that tokenization was set to take center stage in the Russian market after it successfully underwent a test period as reforms for newly proposed cryptocurrency legislation got thumbs up. With Atomyze breaking ground, it seems the Russian crypto space has reached a new lease of life.

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AmeriCoin – The Pathway to Monetary Freedom, Tokenization and the American Dream?

Is cryptocurrency the tool to achieve the “American Dream”? Adam Kokesh, the leading libertarian candidate of the 2020 US presidential race has revealed the plan to develop AmeriCoin cryptocurrency. The development of AmeriCoin will be led by Alastair Caithness, the Chief Blockchain Policy Advisor appointed by Kokesh.

Purpose of AmeriCoin

The announcement of AmeriCoin is part of Kokesh’s localization plan, which aims to mitigate the reliance of the Federal Reserve due to the instability of the fiat currency system. The recent global stock market crash following the disagreement on oil price between Russia and OPEC nations, interest rate cut by the Federal Reserve and macroeconomic uncertainty caused by Coronavirus have reignited the debate on whether Bitcoin is considered a “safe-haven” asset. Oleksandr Lutskevych, CEO & Founder of CEX.io believed that US and UK investors expect Bitcoin to serve as a hedge against currency depreciation, which indicates the American’s demand in seeking alternatives to fiat currencies. Kokesh identified the need of creating a decentralized monetary system and AmeriCoin will serve as the backbone to achieve his goals.

The New Vision to Monetary Freedom and Tokenization

Unlike cryptocurrencies such as Bitcoin, AmeriCoin will be backed by assets of the Federal Government including gold, timber, land, energy and mineral reserves. If Kokesh becomes the next US President, he intends to distribute an equal number of AmeriCoin to the entire population of the US. Such distribution attempts to eliminate unfair government policies on taxation, aiming to serve as the unit of universal basic income. As a result, citizen’s wealth is no longer controlled by the Federal Reserve which in turn brings them monetary freedom.

With the advent of AmeriCoin, Caithness is confident in restoring liberty, financial and monetary freedom for the Americans. “It’s an honor to work with Adam Kokesh as he seeks to transform American society. The burden of federal tax is one of the main reasons young people are having such a difficult time developing a sound financial start to life. I am confident that Adam’s initial idea to create an American cryptocurrency can be combined with the rapid advances in the architecture of asset-backed tokenization to develop AmeriCoin as a force for financial freedom. AmeriCoin has the potential to restore liberty to all people in the United States, and we are building a dream team of blockchain experts to join me in developing this important project,” she added.

Both Camps Care About Cryptocurrencies

Cryptocurrencies are gaining popularity between both Democratic and Republican parties. Former Democrat presidential candidate Andrew Yang is renowned for his friendly approach towards cryptocurrencies, which he asserted that blockchain should be incorporated to modernize the voting systems. Yang is also a supporter of cryptocurrencies when he highlighted the importance to regulate digital assets.