Security Tokens are digital assets subject to federal or government security regulations. In layman terms, they are the intersection of digital assets (tokens) with traditional financial products — a new technology improving old things.
Banks should seek to leverage blockchain technologies as part of a bid to defend their business models from disruption, Deutsche Bank Research suggested in a recent post online entitled "Blockchain attack is probably the best form of defense" discusses bitcoin and blockchain and its implications for major banks broadly calling the technology " one of the first truly disruptive ideas from the FinTech sector".
Our team will launch the "Investment Blockchain Bank & Trust" or (IBBT), the first decentralized bank and trust company to work with rules set by a group of smart contracts on the Ethereum Blockchain. Formation of an Investment Bank & Trust smart contract provides a governance structure, borderless virtual vaulting as a service and the opportunity to apply the benefits of the blockchain technology to work with a traditional bank charter strategy in the jurisdiction of Malta, a sovereign country of the European Union.
A real market entry opportunity for the launch phase of IBBT is to offer solutions and services that help legitimize the securitization, administration, and on-boarding of companies that seek to issue tokenized securities or initial coin offerings in the public markets. At $7+ billion in offerings so far in 2018, the ICO market is booming but lacks a regulated vehicle to facilitate this new digital asset class.IBBT will offer clients seeking to issue securitized tokens:
- smart contract administration/underwriting and auditing procedures
- access to escrow, and authorized security token depository with multi-signature counterparties.
- decentralized crypto asset exchange, and
- self-sovereign KYC/AML compliance solutions
Why should anyone invest in a new technology that replaces or enhances existing personal banking practices from one organization to another?
- Their money (investment) is more secure unlike an equity holder in a traditional bank. In traditional banks, paper shares are the only thing an investor gets, and a promise that all things will go well! (Saving & Loans come to mind).
- An investor in a Blockchain bank holds a percentage of the tokens issues, vested with a Vesting Duration and Vesting Cliff, which means they have an exit strategy on their Ether Tokens.
- An investor of a Blockchain bank can hold private tokenized equity securities that can ultimately be sold to secondary Ether markets. Once more the investor has an exit strategy for the equity position they hold.
- The Financial Market is 161 Trillion dollars in Derivatives, Futures, Indexes’, Mutual Fund and the like, so what percent of that market the first blockchain banks will capture! Any Savvy investor will play the odds as they know, the odds are on their side! Big banks know it, but the bureaucracy is weighing them down.
Established financial institutions and banks failed to understand and embrace the decentralized and transparent nature of bitcoin and the blockchain technology since its birth in 2008.
Some bitcoin experts and financial gurus argue that banks still don’t have a solid grasp of Bitcoin’s core values and purposes. Bitcoin as a technology and a currency was created to be used by anyone without the influence and control of a central entity. However, Over the past few years, Wall Street banks, multi-billion dollar financial organizations, and groups have joined a blockchain research group known as the R3 consortium, trying to create blockchain-based applications, platforms, and currencies to “decentralize” current financial systems.
Although these organizations’ positive approach toward the blockchain technology is regarded as something positive, they still demonstrate a hostile view toward Bitcoin, claiming that bitcoin is not viable as a currency and as a technology due to its “restrictions” and limitations.
Essentially, banks are trying to adopt the technology, which is meant to support a decentralized currency to develop a centralized application. By using the blockchain technology, these institutions want to create an automated and transparent banking system secured by cryptographic algorithms.
The problem with this approach is, the banks are disregarding the decentralized nature of bitcoin and the blockchain technology. The reason behind the banks’ struggle in the process of embracing the blockchain technology is that they are trying to centralized what already has been decentralized. Creating and deploying centralized applications on a decentralized platform is not only effective but unsecured. The Bitcoin network’s security is maintained by millions of miners around the world that generate enough computing power to secure the blockchain. However, the banks currently have no fundamental understanding of this “security” concept.
“They want to adopt the efficiencies without the decentralization, the low cost but with control, and the global nature but with censorship,” said Antonopoulos. “You can’t have the revolutionary nature of Bitcoin while stripping it of all the things that make it innovative and exciting.”
These securities have not been approved or disapproved by the SEC nor have any representations been made about the accuracy of the adequacy of the information. Don’t enter any investment without fully understanding the worst-case scenarios of that investment.