TeqAtlas talked to Rick Tapia of Blockchain Agility to discuss the effect of blockchain technology on the financial markets and the development of the digital securities ecosystem.
Tell us about Blockchain Agility. What do you do, what is your main expertise?
Blockchain Agility is an advisory firm that is focused on helping cultivate organizations of different levels to help them take the next step. We help organizations that are in different stages, including early seed funding rounds to companies looking to conduct a Series C offering. Our team has experience and expertise to assist companies in areas from marketing their organization or raise, ideation, assisting them with tokenizing their assets, technology development, legal compliance and other key facets.
While working on our Digital Securities Market Research, we have discovered that one of the main barriers of DS adoption is the lack of education. What do you think could accelerate the learning curve?
I would certainly agree with your research and findings. I’ve always been a big proponent of education and believe that is the key to ensuring mainstream adoption of DLT and digitized securities. Our organization is partnered with KoreConX and one of the main areas we are constantly discussing with them is how we can work together to better educate the market. I believe that more in-person events that are centered on educating people about digital securities is key. There are many events happening all across the world centered on DLT, cryptocurrencies or digital securities and many end up being pitch competitions with very little ROI for attendees who end up pay an absorbent amount of money. However, if we have events that are education-focused and that offer high-level networking opportunities, I think that’s how we can help accelerate the learning curve. Of course, having online resources like TeqAtlas is also a major key. When you realize just how much of a benefit the blockchain can provide for securities in terms of creating liquidity, faster settlement times and other benefits, it’s hard not to get excited and I feel privileged to be a part of this movement.
How many conventional businesses do you work with that either want to understand the blockchain, or potentially implement it into their existing business practices? What is the % of these types of businesses?
This is an interesting question and the answer is two-fold. On one hand, almost all of our private placement clients are focused on wanting to do a DSO (aka STO) and with that obviously comes the desire to understand DLT and how it can benefit the organization in regards to issuing a digital security. On the other hand, for example, we have some organizations that are heavily focused on improving their supply-chain systems that want to understand blockchain technology and how it can improve these processes so there’s certainly a desire there. Ultimately though, not every company that is issuing a digital security needs to have the blockchain be a part of its core business but an understanding of how the system works for the digital security aspect needs to certainly be in place.
Lots of people trying to tackle in the whole asset tokenization in different ways and few people are sort of in the fractionalization of specific assets. What is your vision of the state of the market development?
I believe the market is focusing first on the sort of “low-hanging fruit” which is the fractionalization of existing assets, with real estate comprising a sizable portion of this. From there, I believe that once some of the uncertainties with emerging secondary markets and regulations in different jurisdictions become clearer, we will start to see the market fully take shape with tokenization occurring in many different niches and industries.
If we put these assets on the Blockchain how will that affect the process by which these securities are valued?
This is an interesting question and there’s many factors to it but I will expand on just a few. In one sense, the notion that liquidity will be brought to a primarily illiquid market could in theory place a higher value on these digital securities since there would be more market awareness along with more buyers and sellers of the digital security. However, unlike in the world of ICO’s, these digital securities are tied to some sort of value (equity in an organization etc.) that make the value of the security much more tangible and easier to assess.
The industry is obsessed with the idea of disintermediation. Do you think that those intermediaries are ways for those issuers to outsource their risks?
I believe there’s multiple ways to look at this question. I am a big believer in decentralization in many regards but I also understand that it’s also not the best solution nor the most practical in some cases. For one, some intermediaries serve a necessary purpose such as an organization that is maintaining custodianship of the digital security. On the other hand, there is an argument that some intermediaries such as an investment bank could act as a barrier for someone seeking to invest in a security offering while others see it as a way to help educate an investor and to help screen out offerings that may not be suitable. I see both sides of the argument in this regard and while intermediaries could be viewed as a way to outsource risk, it’s imperative that the issuer take all necessary steps to ensure they are running a fully compliant and well-structured offering.
What do you think will really drive the increase of the size of this ecosystem?
I believe there a few drivers that will help increase the size of the ecosystem. For one, I believe that once the space has developed a track record of successfully ran and proven DSO’s along with strong markets to buy and sell the digital securities, we will see the ecosystem grow immensely. Secondly, once we get market clarity on some areas that were aforementioned and issuers, investors, broker-dealers, lawyers and all the other players understand the benefits of working with DLT and digital securities, it won’t be long before the rest of the world wants to jump in.
Tell us about the plans and goals of Blockchain Agility for 2019.
Our plans for 2019 are threefold: firstly, to take our clients to the launching of their STOs, fully compliant and prepared, secondly, to expand our suite of offerings for them and new potential issuers, and finally, to help in the education of the untapped world at large on the benefits of DLT and digital securities. We understand that the space is very much in its infancy and we want to be a part of helping ensure its growth well into the future.
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