Asia Blockchain Review recently spoke to Luc Falempin, CEO of Tokeny, which provides investment banks, funds, mid-cap companies, and distributors with the modular, user-friendly technology required for firms to digitize their businesses to enable automation and drive efficiency. Luc talked about bridging the gap between blockchain and compliance for corporates, helping SMEs grow with blockchain technology, and his vision for the future of blockchain and cryptocurrency.
Asia Blockchain Review: How has your experience in technology contributed to Tokeny’s operations?
Luc Falempin: My previous experience revolved around me building a marketplace solution in the e-commerce industry. It was a SaaS (Software as a Service) business, and I worked with some of the largest e-commerce websites in France. Having this experience with regards to building and scaling a team, marketing the product and driving sales has been something that was easy to transfer to a business such as Tokeny.
ABR: What is Tokeny doing differently from other tokenization platforms?
LF: When we incorporated Tokeny two years ago, we did so with the idea of tokenizing financial instruments. Our approach to global compliance and on-chain identities is unique.
Our issuance platform has predefined workflows and KYC (Know-Your-Customer) datasets to comply with each project’s requirements, such as where the issuers and investors are located, what type of instrument is being issued, whether it is a private or public placement, what type of investors i.e. accredited, and so on. Our token standard, the T-REX (Token for Regulated EXchanges), creates reusable blockchain identities for investors through investorID while also guaranteeing that these regulations are natively enforced and monitored. As we deploy new projects, we enrich our expertise and understanding of compliance rules and regulations.
We are also the only company that supports issuers with an end-to-end solution. We focus on the technology side and have solutions that support the compliant issuance of securities, the blockchain solutions to facilitate the ownership transfer, and servicing solutions for the ongoing maintenance needed for issuers and investors to manage their assets. Our clients can also benefit from our esteemed network of established close relationships with legal, advisory, and marketing sectors. We connect our clients with every step they need to issue a compliant security token offering.
ABR: Why should companies tokenize traditional securities? What are some of the benefits of tokenization?
LF: Tokenization will impact all financial securities but at different levels. Let’s focus on where we think tokenization will have the most immediate impact — private markets. These markets are very fragmented, and many of the processes are still manual and cumbersome. Through a tokenization service such as Tokeny, companies can digitize these processes, automate many operations, and ultimately deliver a better experience for their clients. Those are benefits that can be seen in the short term.
With regards to the long term, tokenization has the potential to bring liquidity into markets where it hasn’t existed. Traditionally, private securities could only be traded on secondary markets after using an extensive number of middlemen and following strict, difficult-to-navigate regulations. By streamlining and automating these processes and using a common distributed infrastructure, companies can remove the burdensome hurdles that previously restricted the liquidity of their securities. Secondary markets will also offer increased liquidity through a constant 24/7/365 trading market.
ABR: Can you tell us about your partnership with Havas Blockchain and Psion Finance in creating ST8 for French SMEs? What does ST8 offer to SMEs?
LF: ST8 is an all-in-one solution that takes advantage of the progressive regulation in France. The regulatory body there, the AMF (Autorité des marchés financiers), has exempted offerings below eight million euros from having to create a prospectus. The issuer only needs to create a simplified document to reach investment. ST8 was born with this in mind and allows issuers to take advantage of this progressive attitude and utilize best-in-class technology to open up a new pathway for SMEs to raise capital.
Psion Finance will handle the advisory side for issuers, Tokeny will offer the compliant technology needed, and Havas will be able to offer their wealth of PR and communications experience to those wishing to work with us.
ABR: What does investorID offer to the security token ecosystem?
LF: investorID allows investors to easily generate their on-chain identity to access tokenized securities. Once this identity is created, the KYC and AML (Anti-Money Laundering) checks are processed and the user can view and assess the offerings they are able to participate in. It is a not-for-profit organization that allows investors to manage their own data and access multiple security offerings without having to go through the same process each time.
For institutions, investorID allows these firms to benefit from using a distributed ledger, while also allowing them to apply control and compliance to their operations. The platform allows issuers to connect with a global investor base and digitally onboard investors.
ABR: What are other features/projects can expect to see from Tokeny this year?
LF: We have worked with single issuers and they remain a core part of our business, but we’ve seen a significant uptick in interest amongst the traditional financial players. Investment banks are particularly interested, as tokenization allows them to digitize financial assets and complement their existing processes, which enables them to provide their clients with a digital-first service. Maybe not this year, but I also expect distributors to reveal their hand soon, something that has been missing so far.
It’s true that one of the key benefits of tokenization is the promise of liquidity, but without the secondary market, this isn’t possible. Once the established players adopt the technology and the new exchanges are live, this liquidity will be achieved, and current financial markets will hugely benefit from this.
ABR: What is the potential of blockchain for SMEs or corporates in Asia?
LF: In Singapore and Hong Kong, the regulation is progressive and agile, so the potential is quite high. However, the market in China is tricky. Although the country has tremendous financial power and is among the world’s tech leaders, it’s very difficult for Chinese investors to participate in security offerings internationally. DLT, being a network that’s globally accessible, therefore loses one of its great advantages, so the regulation might stifle adoption in China.
ABR: How is blockchain technology revolutionizing the capital market?
LF: Many industries, such as retail banking, have been brought into the digital era. However, capital markets are still very analog by nature. We want to bring this industry into the digital world so participants can minimize costly processes and replace them with improved efficiency. This will enable players in capital markets to serve the market in a better way.
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