How to build a democratized Investment Ecosystem

0

This article is written by one of our contributor Stefan Perlebach.

This week we are welcoming Philipp Pieper from SWARM, a non-profit foundation on a mission to:

“build an open infrastructure for the new, emerging digital securities economy.

Philipp will explain to us what it takes to democratize the financial & investment world, what role SWARM is playing within the ecosystem, his best learning he has made in the last year and what happening excites him the most in 2019.

Enjoy the Interview


What is SWARM’s vision?

SWARM’s vision is to create an openly available infrastructure to create and operate digital securities.

We are building a democratized finance and investment ecosystem where people from all over the world can invest alongside each other in the currencies of their choice — crypto or fiat — via the underlying tech that is flexible, decentralized, transparent (to those who want to understand how it works), and simple (so that the majority will never need to understand how it works in order to utilize it).

What is the role of SWARM within the Security Token Ecosystem? What makes you special?

I’d say we are fairly unique with our approach and value proposition. We have been shipping product for nearly two years, have had millions of dollars transact on our tech, and are decentralized — with over 340 live masternodes and the SWARM council overseeing the activities of the network. This puts us in a very small group of projects in crypto and we take that very seriously.

Within the ecosystem, SWARM has focused on two crucial pillars: facilitating fractional ownership and facilitating the compliant purchase and transfer of tokens. SWARM is special because everyone in the STO ecosystem and beyond — even those once considered competitors — can work with the technology to achieve their goals. Those sourcing STOs and investors can use SWARMs fundraising and issuance tech for free to bring offerings to market. The many various supporting services in the industry such as exchanges, wallets, plus KYC and other verification providers, can use SWARM’s tech to lower the friction of accessing and compliantly trading security tokens while unlocking more users. Individuals can use SWARM’s Investor Pass to seamlessly access opportunities and exchanges, going through verification once instead of every single time they sign up for a new service.

In your experience, what is the biggest misconception people have about Security Tokens?

For better or worse, Security Tokens still suffer from the sins of ICOs — many of which were effectively get rich quick scams and/or unregistered securities offerings. The real use cases for STOs, at least for the foreseeable future, are with larger asset classes and well-established entities with demonstrable offerings, and NOT startups with no product and no revenues.

Further, Security Tokens have so far been seen primarily for fundraising within the category of crowdfunding. Equally important, if not more, is the opportunity this technology presents to tokenize existing capital structures — leveraging the efficiency gains, flexibility, auditability, and liquidity that the blockchain introduces. This aspect has remained largely undiscussed, but the institutional interest and engagement on this potential is very strong.

What are the biggest challenges for the Security Token Ecosystem to democratize access to capital markets for companies and (retail) investors alike?

In the US, regulations exclude most Americans from participating in Security Token Offerings. That’s obviously a large barrier to democratization. Other jurisdictions are more friendly to retail investors, but may lack the standards and systems needed for scalability. This is why we have chosen to focus on the specific areas we have — including Market Access Protocol (MAP) — and why we knew from the outset that it had to be decentralized, not owned by us or anyone else.

However, the bridges into the established institutional marketplaces are being built as we speak. Examples of these bridges range from the security token infrastructure demonstrating its use and reliability, to institutional-grade custody solutions, to financial services being created around this new architecture of the financial stack. It takes time, but we are getting there fast.

What is the most exciting happening you are waiting to see in the Security Token Ecosystem in 2019?

We suspect the most exciting thing in Security Tokens will be the arrival of very large, very boring, tokenized opportunities in very well-established areas of global finance. Bringing new investor pools and liquidity to things like municipal bonds may sound boring but will be the kind of thing that brings billions into the ecosystem in a way where far more people can participate.

What is the best learning you have made within the last year?

The most crucial thing we have learned over the last year is the importance of meeting people where they are. That is to say, user experience means not just the interfaces to technology but the way people feel when they engage with it. People want choice, people want to feel safe, and most people want technology to “just work” with as little friction as possible. This is why we prioritized the fiat gateway, enabling investors to come with their choice of 80+ fiat currencies in addition to the dozens of cryptocurrencies already supported. It’s why we engaged institutional grade custody and fx providers, so people will know their funds are safe throughout the investment process and they have the option to have a trusted provider handle all crypto transactions for them. As much as those of us who are deep in this space like the control of directly handling our tokens, we’ve come to embrace the fact that most people would rather it just be done for them with a click. In the end, I see most users of the SWM token never directly handling it, yet it will flow through the infrastructure throughout the issuance, staking, and trading processes.

What are the biggest upcoming challenges for SWARM to be successful over the next 5 years?

The real limitations of regulation as well as the uncertainty it brings to the whole crypto space will continue to be one of the biggest challenges until it isn’t.

Thank you for the Interview!

LEAVE A REPLY

Please enter your comment!
Please enter your name here