Matthew Sullivan, CEO and Founder of QuantmRE, the world’s first Blockchain-based real estate marketplace which offers fractional interests in single-family residential homes, has put strict governance at the heart of his business. He believes that best-in-class compliance should be at the top of every token issuer’s agenda.
Crypto outpaces compliance
Crypto assets are in the early stages of development, but it is a market that is moving fast. According to research by Fabric Ventures and TokenData, in 2017 Initial Coin Offerings (ICOs) raised over $5.6 billion in capital compared to $240 million in 2016, and although there has been a certain amount of levelling out lately, there is no doubt that ICOs are experiencing rapid growth.
Two main developments in the past year have contributed to this massive proliferation of ICOs. Firstly, the building out of many of the blockchain platforms to create entirely new business models. For example, tokenisation and smart contracts via Ethereum, Stellar and other token platforms. Tokenization or asset-backed tokens are backed by tradable, tangible assets, similar to traditional shares or stocks. However, they are represented digitally on the blockchain, rather than on paper.
Secondly, as the capital inflows have grown so has the investor base. Asset-backed crypto strategies can offer access to a broader range of investments and in many cases can be accessible to every level of investor.
While many ventures are still playing catch-up with the rigorous security and compliance testing that is associated with more mature markets, QuantmRE has laid the foundations for a fully regulatory compliant investment vehicle.
The QuantmRE infrastructure has been designed to adapt to mainstream operations standards. As a result, it can keep up with developing operational technologies. These offer blockchain-based services for issuing and trading security tokens which provide an extra layer of trust for asset-backed tokens, increase transparency and ultimately, can help protect investors in the long-term.
Another important topic under current discussion is around how to incorporate ‘know your customer’ requirements into the cryptosphere. Crypto assets are designed to be anonymous, but a recent crypto report by KPMG suggested that for some assets, such as those that can be token-based like real estate, it is important to adapt the blockchain protocol to limit transactions to KYC-verified wallets so that all transactions could be traced back to an identified wallet.
This is good news for Sullivan and he agrees with the way the industry is evolving.
“It is critical that there is a robust, frictionless regulatory compliance process in place. In fact, QuantmRE is currently conducting a Regulation A+ offering for its EQRE token.”
QuantmRE has just signed up to use Securrency’s fully-built suite of technologies to support its EQRE offering and provide the cornerstone technology for QuantmRE’s global real estate marketplace.
Securrency is a US-based provider of financial and regulatory technology products for the tokenized issuance and trading of securities.
Securrency’s token management technologies provide security, compliance and transactional rules embedded in a technology layer that includes tools designed to detect money laundering and help tokenized securities remain compliant after issuance – including in secondary-market trading.
Uniform standards, global appeal
“Our aim is to enable prospective QuantmRE members around the world, including institutional investors, family offices and individuals, to make investments from various gateways using a single, uniform system,” adds Sullivan.
The QuantmRE team has developed a unique platform relating to the intrinsic value of tokens which they believe will generate new levels of trust for asset-backed tokens. Investments can be accurately measured and valued by certified third-party valuation methodologies.
If cryptocurrencies operate as regulated securities with the highest operational standards, Sullivan foresees that there is likely to be a mass-market adoption of asset-backed tokens.
Whatever the future holds, there is no doubt that as token offerings have become more sophisticated, creating comprehensive security, compliance and transactional rules will be a pre-requisite to any successful venture.