Former UBS Executive Launches US-based Security Token Issuance Platform
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Former UBS Executive Launches US-based Security Token Issuance Platform

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Yesterday, Claude Waelchli — a 12-year veteran of UBS — has announced the launch of a U.S.-based security token issuance platform. UBS was one of the world’s first major banks to experiment with blockchain technology, which Waelchli says will soon spark the next evolution in capital markets.


Former UBS Head Launching Security Token Platform ‘Tokenyz’ Explained

UBS represents a conglomerate of the Union Bank of Switzerland, the Swiss Bank Corporation, and Paine Webber. The bank was an early adopter of blockchain technology, experimenting with the emerging technology as early as 2015.

In August of 2016, UBS teamed up with BNY Mellon, Deutsche Bank, and a number of other entities to create UBS’s Utility Settlement Coin (USC). While the project’s development is ongoing, the main idea is to establish a virtual currency that can be leveraged by financial institutions when transferring securities amongst each other.

Now, former UBS Head of Portfolio Advisory Claude Waelchli has announced the launch of his own project, Tokenyz. The platform will help companies issue security tokens. According to Waelchli, the “digitization of traditional securities will create exponential growth opportunities for traditional financial markets”.

Waelchli brings his 12-year experience from UBS to found the project along with Benson Samuel and Harsh Patel. Samuel has experience in the algorithmic trading systems needed for digital assets, while Patel is a blockchain developer specialized in smart contracts that deal with cybersecurity protocols.

There are two domains of the nascent security token industry that Waelchli plans to bridge together. He says,

“Today we have two separate camps: tech companies with immense tokenisation capability but little financial acumen, and financial services companies locked into their traditional business models, who experiment a little with new technology but nothing substantial to date.”

How do regulations work with security tokens?

The new firm is reported to have already built an infrastructure capable of supporting security tokens. They will now aim to standardize security tokens through the ERC-1400 token standard.

Security tokens are anticipated to bring significant benefits to traditional securities transactions. Thanks to the benefits of blockchain technology, highly valuable and typically illiquid assets see added liquidity through fractional ownership, global markets connected 24/7/365, the elimination of costly middlemen, and almost instantaneous settlement cycles. Both asset and investor management also see significant advantages when compared to the word’s existing legacy systems.

The new company now joins the likes of similar platforms, to include Securitize, Polymath, and Harbor — among others. There still seems to be a bit of institutional hesitation when it comes to almost any aspect of finance incorporating blockchain technology. The Initial Coin Offering (ICO) was used to raise billions of dollars, but violated many securities requirements that are enforced when raising capital. As a result, blockchain has a bit of a clouded reputation in the highly regulated capital markets industry.

That’s where the ICO and STO differ, however. Those who leverage the STO acknowledge that it is indeed a securities offering, and subsequently must be compliant with the appropriate laws and regulations. In the United States for example, the SEC heavily regulates securities offerings, which can be burdensome for most companies.

Waelchli believes regulators both in the US and across the globe are warming up to the integration of blockchain and traditional securities. A number of no-action letters by the SEC have been issued and several securities exemptions for token offerings have been utilized. In turn, this will only lead to the next evolution in the capital markets industry, says Waelchli.

“Regulators are clearly getting more comfortable with the new technology and I would expect that the US will soon play catch-up and close the gap with smaller jurisdictions.”

What do you think about a UBS veteran launching his own security token issuance platform? How long before security tokens see mainstream success in the United States? We want to know what you think in the comments section below.


Image courtesy of UBS.

November 28, 2019

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Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions (IoT).