Monday, May 23, 2022

Clarifying Common Myths and Concepts: Understand the Difference between IPO, ICO and STO

so today we have s EDG torn yikes from Thailand who will be exploring the regulatory landscape and ecosystem of digital assets in Thailand so fit out but duo just pass over that time well thank you very much for inviting us to speak at this conference they're very very excited about speaking about this .

Topic today so today we will not be talking about blockchain and digital assets the digitization of the time mark capital markets from primary issuing so ISO issuance all the way to digital access training so let me hang it up with prim props to quickly talk about who we are hi everyone thank you very much for for being here .

I'm pin price check about the CEO of ER X and Steven here is the CMO of se digital the common link amongst our two companies basically elevator returns elevator turns was established in 2014 by president our president and founder stefan de batz stefan established every times in 2014 to do real estate as management this was .

Hospitality asset management we elevators that returns as a group sort of got into this digital asset space in 2018 via the issuance of one of the first real estate backed security tokens issuing in in 2018 the token basically represented around a 20% stake in an asset in Colorado called st. Regis Aspen .

Okay so just coming a little bit to semi-closed semi-closed curiosity Joe and ER X in 2018 after the successful issuance of Aspen token Aston coin elevator turns shifted their focus to building digital asset ecosystem and obviously I think one of the first places that we wanted to start was basically Thailand partly for reasons .

That Stefan had been working Thailand for a very long time and also because we feel that Thailand has a very sort of strong and clear-cut regulatory regime as well as a very sort of supportive regulatory environment in terms of that are sort of first steps in Thailand we invested in FC Diderot semi-classic uri's 21 percent stake in leading .

Financial services company in Thailand that also has banking relationships with chrome Thai bank they through this investments of around 10 million dollars we established SD digital which is the arm that focuses on digital assets in Thailand I will let sort of Steven introduce live about a city to do yeah sure so a Improv mentioned we were .

Established late last year October 2018 we're a fully owned subsidiary of silicon securities which is a leading security focused financial services group in Thailand recently we received approval to operate at the nicety Oporto in Thailand by the security Exchange Commission in Thailand and for us we aim to deliver a one-stop .

Shop for digital token offering so that's everything from advisory to the actual primary issuing of the token as well as support for secondary services so that's everything from compliance to investor communication just a brief introduction on ERX we were stopped in 2019 in April we have an official license with the SEC to operate .

As a digital asset exchange under that there's your asset based act in Thailand our business strategy is to basically focus on integrating with existing financial players in Thailand broker dealers of digital financial markets and our key focus will be on listing investment tokens that our real estate back wheels it has real estate exposure .

Or that provides exposure to try investors of foreign assets as well okay thank you so I want to touch a little bit on some of the recent development in Thailand's capital markets in Tyler and actually the SEC the central bank the Bank of Thailand essentially have been very very progressive and adopting blockchain and financial innovation in .

The capital markets as well as the financial services sector in Thailand so want to give you some recent prominent developments that are taking place in the Thailand capital markets and financial services sector firstly in early 2018 Bank of Thailand initiated a prop chain bond project where they aim to gain .

Deeper insights in the blockchain and also looking at benefits in terms of cost reduction as well as operational efficiencies as it relates to bond issuance so the first use case the back of Thailand was exploring was the government saving bond issuances and in May 2013 the emergency decree on digital asset businesses was pronounced with the .

SEC Thailand of the main regulator and I'll speak a little bit more about the emergency decree on digital asset businesses in subsequent slides and in July the count the tight bond market Association also announced that they plan to develop a blockchain base bond registered services so this is a platform .

Would include a false statement information in a fallen subscription platform as well as verification of transactions that takes place as relates to puppet Wong transactions and then more recently in June with the support of Bank of Thailand the blockchain community initiative launched its first initiative which is a boxing bass .

Electronic letter of guarantee and this is something that is conducted with the participation of 22 local banks and foreign branches and then lastly SEC Thailand recently has announced that it plans to propose investing in distributed ledger technology to his board of directors essentially to create a digitized platform in Thailand for .

Securities and investment products so just wanted to give you guys a quick highlight of some of the recent developments in Thailand and how supportive the regulator's the agencies are as it relates to embracing blockchain and financial innovation in the context of capital markets or financial services so let me deep dive a .

Bit about the emergency decree on digital asset businesses so this is a the main regulatory framework that regulates the digital asset ecosystems in Thailand so let me let me give you some key takeaways from this emergency decree on digital asset businesses first the decree regulates both the primary and secondary market so that relates to .

Both the primary market for sure as well as what we call an IC o—- portal which is essentially analogous to a financial adviser in a typical IPO in Thailand obviously the emergence decree also regulates the secondary market so that includes the digital asset exchange as well as the principal in aging so the digital at the broker and the digital .

Asset dealers that are in the in the ecosystem a super late to digital assets under under the decree digital access refer to both cryptocurrencies as well as digital tokens and digital tokens in Thailand are classified into two types one is an investment token and the second one is a utility token the main difference .

Between a utility token and investment token is that an investment token are used for determining rights of investors and a utility tokens confers the rights as a token holder to receive specific goods and services so and one of the key thing to remember also is that in terms of the rights of the digital tokens these must be clearly defined in what we .

Call prospectuses and and these prospectuses have to be submitted to you and approved by the SEC so in Thailand in terms of in terms of how to pay for invest in icos or what to be used as training pairs as it relates to trading on a digital asset exchange entirely in addition to Thai Baht the Thai FCC has approved for .

Crypto currencies that can be used to invest ICO so these are Bitcoin ripple Stella and ethereal so let me go a little bit deeper in terms of looking at the difference between an IPO and Nico in Thailand so in both an IPO and ICO in Thailand they are both regulated by the SEC now advise BA in in the case of IPO they're advised by an FCC approved .

Financial adviser so an investment bank in a nice do these are these offerings are advised by an SEC approved ICO portal and currently there are three approved ICO portals in Thailand the case of an IPO issuers must meet certain criteria so paid up capital net profit etc they can make investors fear making investments with no limitations whereas .

In the case of niceö investments are made there are certain limitations as it relates to what an investor can can can subscribe to now 0 for example there's a limit in terms of how much a retail investor can invest so in Thailand that is a maximum of 300,000 high pot for retail investor in an offering and lastly as I mentioned earlier in the ICO .

Investors can make can make can subscribe to an IC o—- via Thai Baht on an approved cryptocurrencies wears an IC oh sorry where's the IPO investors only be able to make in Thai Baht and then in terms of returns in terms of the IPO you know obviously returns are accrued the in the form of dividends and .

Capital gains in terms in the case of an IPO the right or specified the whitepaper let me now go a little bit more in depth in terms of a typical initial coin offering launch process so and I still launch process so consists of when I call blow and I feel portal will offer to provide advisory for example due diligence worked with the .

Third law firm in terms of legal review the structuring design of a token as well as support the issuer in terms of marketing once the approved the prospectuses of the offering and then obviously in in terms of the actual token issuance kyc AML investor suitability those are all being conducted in Thailand during the actual .

Primary issue and that's actually the responsibility that a co portal has tours investor and then obviously then the issuance of the actual token on the blockchain platform I said I still Porto in terms of a nice don't launch they could also provide support in terms of connecting them to digital asset exchanges to in order to support .

Liquidity and then lastly there's also a lifecycle management piece which is everything from ongoing compliance so making sure that you know and in very specified investor can invested in can can can receive the token to investment investor communication and benefits payout for example in terms of what we believe to be some .

Of some of the core benefits of digital tokens in capital markets we see fractionalization as one of the core benefits so since I value commercial real estate it also allows for automated compliance so this is essentially embedding compliance requirements at the protocol level so in the case of FC digital this would be all embedded in a .

What we call smart contracts and things such as investor communications to investor limit who can invest all embedded in the actual protocol so that the compliant itself is automated obviously in terms of digital tokens just due to the global nature of public blockchain we are with with with digital capital markets we naturally have access .

To potentially a global investor base across jurisdiction with 24 7 trading obviously with automation there's a lot of cost savings that could be had involved in terms of the initial offering as well as the issuance and then lastly within chrisley liquidity as it relates to a lot of illiquid assets that can be tokenized via digital tokens .

We eliminate potentially an alacrity discount by essentially reducing the friction of buying selling of illiquid assets so with that I'll hand off the paper up to talk about a similar market opportunity and digital asset ecosystem thanks Steven so I think one of benefits that we all sort of think is useful from the process of tokenization is that it .

Brings liquidity to an illiquid asset class so I think two of sort of the most talked about illiquid asset class would be sort of real estate as well as art and here is just a demonstration of I think what we think is a huge opportunity for tokenization so as you can see the gobo aries market is around 70 trillion .

Dollars in relation to that you see that basic gobo real estate is actually around sort of 200 plus trillion just to give you a little bit of sets of scale in today's market the value of all REITs around the world is it's understood to be around three trillion three trillion dollars so if we say that we can tokenize a majority or second proportion .

Of this global real estate market beyond REITs then we have certainly hundreds of trillions of potential opportunities to to sort of capture so as I mentioned previously I think the reason how eleve returns got into tokenization is actually through this project our flagship project the asset was st. Regis Aspen and Colorado szyskii a luxury .

Five-star luxury ski resort and this was issued in around 2018 August 2018 we have sort of private placements as well and also marketing through IndieGoGo a subsidiary returns manage the whole process and currently we are using securitized as a platform to manage life cycles or the tokens through this token we actually sold approximately a 19% .

Stake in the project it is equity raising approximately 18 million dollars in addition to sort of details on the transaction it was actually also one of the first security tokens in the world to issue dividends as well which was completed recently to issue dividend the investors was given a choice to either receive u.s. dollars or cryptocurrencies .

So just to recap a little bit on Stephens discussions earlier about the regulations so this page actually depicts the whole sort of ecosystem in Thailand obviously I think the companies or issuers I would want to raise funds is one investors can basically under tie regulation at the moment at least under the SEC .

Regulations there's actually no limitations in terms of who can invest in the tokens but for example like banks and insurers and as managers currently cannot invest in the tokens yet but that is a limitation by each of the industries regulations so at the moment I think it basically allows retail investors to invest high net worth .

Individuals accredited investors and basically unregulated private companies and public companies as well so the process goes similar to what Steven said earlier the ICO portal which currently there are three license or ICO portals t-box long route and s0 all three of which received their licenses in October this year so they're the first three .

Players in Thailand they are the ones that do the screening other projects as well as a white paper preparation the legal structuring the violence structuring of the underlying sort of business of the token in addition to that they also focus on marketing to investors with parking strategy once it's done at the IC or .

Portal level they do the extra sort of minting of the corn and also issuance of the coin they can actually list on exchange and once it lists on exchange the exchanged in Highland allows investors to they actually accept sort of retail investors as well as institutions as well so from an institutional side there are brokers to .

Deal with license the broker license actually allows for the custody of clients assets as well while the dealer license allows for sort of the proprietary trading or of the tokens I think in terms of exchange currently there are two exchange operating which is set on crow and bit cup pour pee and bit herb also recently received their .

Licenses their focus is my understanding is is basically relatively on on cryptocurrencies at the moment okay so just talk a little bit about more generally about digitized exchange in my view I think there are throws three key functions on exchange in relation to sort of traditional exchanges versus preparing our digital .

Assets exchange in a traditional exchange was a digital asset stage we have order matching right which basically matches buy and sell and obviously another important point is that there's regulatory compliance which all exchanges need to comply with all regulated exchange need for pie with but the key difference between the .

Traditional assets to change versus digital assets change really is in today's model many of the exchanges actually hold the the custody of the clients assets okay so I think this sort of leads to my sort of next sorry it's missing this leads to my next sort of discussion which is important for an exchange because obviously a security is .

Of paramount importance for an exchange so sorry this is supposed to have sort of various named super wallets it's supposed to have called wallet Hardware wallet it's that there's that's right so when we think of a wallet I think there's a misconception of how the word wallet is used in in digital assets traditionally obviously with a normal .

Wallet when we say we put money in the wallet we actually put the cash in the wallet so by that comparison when we say a digital wallet we should actually be putting tokens into these wallets but I think in reality at least you know first first for someone some people are familiar to the industry what are .

Actually held in these wallets are actually private keys and I think what's really important is that the medium in which the private keys are held at least in my view is actually a little bit less important than the security process in which this cue the private keys are stored for example if you store a private key in a hot wallet or cold .

Wallet if at some point someone has gains access to these wallets they can actually transact on the transaction so they can actually sign for transactions and they can also send tokens to two other wallets so I think it's just a little bit of a sort of food for thought instead of sort of focusing on which medium and within which these .

Private keys are stored in the wallets I think it's sort of we have to shift our mindset a little bit to think about the security in which the key can potentially be sort of revealed so I think the focus really is not on the medium which is stored but rather the security process in which we can secure that the security or the private keys .

Okay so I think really the last one I mean I think so so as I mentioned previously LM a returns started building our destroy asset ecosystem in Thailand and we really believe strongly that Thailand is actually D likely to sort of adopt this digital sort of new asset class so in Thailand there's a very strong .

Capital markets it's the second largest market in terms of capitalization in ASEAN and also there's a balanced mix of retail as well since universes as well as foreign investors currently amongst all the commercial banks in Thailand there's a huge liquidity pool US dollars like about 450 billion dollars in September 2019 and of course that's .

Mentioned previously the regulator's are sort of very progressive I think they're one of the few countries that actually have a very clear-cut regulatory environment via the issuance of the emergency creon digital assets business and of course in terms of the customer base we think they are very sort of receptive to technology there's very .

Strong high mobile banking penetration that's potential of Internet users the number of people that actually hold crypto digital assets wallet is is the second highest in the world and of course there's mobile commerce which is the 7 1% of use of interviews which is the highest globally and also in terms of the note time spent on the Internet .

It's a large highest in in the world by country so I think just with this let's just finish off I don't know if Stephen has any final thoughts okay so thank you very much everyone for attending crustacean okay so moving on to our last talk show of the day well third wonder what's the .

Future of fundraising going to be like and what should we be expecting so let's welcome Eric from our international holdings to show us or this exciting world of security token offerings Eric please okay hi everyone okay just a short introduction about who we are all right so RF International Holdings it's a newly set up financial investment .

Firm primarily focused on ten core pillars all right there are about four partners within the firm with totaling about 40 years of experience and our focus is basically to create a digital economy in terms of the financial markets the key appointment holders as I mentioned earlier there's myself in Singapore Ellen basically who .

Is based in Singapore but from Malaysia Lynn Hall from China as well as our director in Japan back in February we were established sometime in late December and and we did our first investment into a Singapore Stock Exchange SGO exchange in Singapore soon to be licensed by mes in February and as our .

Next second project we have applied for fund management license but from mas now what's so unique about our proposition is that the cause of the appointment holders or shareholders that we have we have created this concept of a golden triangle right from China to Japan to ASEAN and this is the value proposition that we are bringing to the marketplace .

Now as for myself just a brief introduction I'm currently also running another firm called new and partners global this is more of a financial trading platform company that we focus on algorithmic trading high frequency stuff currently I'm also a venture partner to go to hospital management right it's managing .

About 100 million in such as well as you guys all know in Singapore we you need to serve the army alright so I'm still in the service now 20 years but prior to that as you can see on the right-hand side of the screen I came from a variety of background from technology firms software firms to sell site you bkn to the derivatives .

Brokerage CMC Markets so these are the the examples of profiles of our partners within our firm now just want to share with you a bit of a landscape in terms of why we are personally in terms of a company as well why we are so excited about the SGO market now so we look at the private market alright private markets basically .

Creates a conundrum where not many of us may have access to now but the beauty of is that the number of Southeast Asian venture capitals have quadrupled from 2012 to 2017 as you can see from the black bars the marketing Singapore going forward the Southeast Asian private equity do value into 2017 grew 75 percent far from the year to 15 billion .

And since 2012 Southeast Asia again has given rise to 10 unicorns right namely from Singapore grab EFS EA Lazzara razor and so forth for the rest of the Southeast Asian countries now looking at these these are the private market deals that are not known to many or not accessible to many right so what is the gap so if you look at this diagram on .

The left hand side you have unequal access to capital markets so you have private firms like issuer a B and C and mostly the issue is with issuers see non-conventional companies meaning to say there's a lot of startups who have done series a fund raising for example but as you know the market is saturated question is how do you get access to .

Good ones right then you have on the right-hand side which is an unequal access to investment opportunity people like you know for example the institution's the sovereign wealth funds they have access to them but when it comes to retail investors it's hardly visible okay and then you have the third fourth and fifth point which is at a .

Bottom of the screen the transparency issues of performance fees multi-layered and limited secondhand trading opportunity now with this gap why why is it so exciting that we're looking forward to with SEO security token offerings HD on the investing side which is the fund raising firms now they are able to basically do proper fundraising .

In a legitimate way but at the same time get exposure to the investor base which a lot of times they have to fight with you know common firms in the private marketplace on the investor side which is on the right-hand side investor C category which I mentioned earlier in terms of retail now they have the opportunity not to only have a view of .

Access to private market firms but in a tokenize in a fractional manner meaning for example if you look at normal securities say you want to buy blue chips right you may need at least a few thousand dollars in the pocket to be able to invest but now you may need you know a university student may be able to now participate in their wealth creation .

Notwithstanding with the legitimacy of a sto everything is transparent you have good valuation you have good legal framework and for the issuing firms sorry just going back one step you are able to down have a selection of whether you want to structure it in the equity format a dividend a debt format or even .

A tokenizing your assets but the beauty of is for example if my own firm if I want to do fundraising I may no need to tokenize 100% of my firm's assets because I only need to raise a fraction of funds to expand into other businesses so that allows me to now progressively build my business as a business owner but at the same time disclosing my .

Business plans revenue streams to the investors who will believe in it and plus more importantly is creating the credibility of proper valuation by people like I I HSN for example legal frameworks being done by reputable lawyers and so forth but the poss of going on to a SEO platform then is as a fraction to a less the market right so .

So I think that's one of the key benefit or why we are so excited in terms of the SEO wall so going back to this particular site just imagine with SEO there are huge potential of the Knicks unicorn that won't let me spring up on on a investments trajectory right so for example as we were as I mentioned our F international holdings we invested into .

A SGO exchange in Singapore which will be holding an mes license that is something that we were fortunate to be exposed to the private market but with sto in the picture we are now able to now have access to a lot more prospective firms right and setting up our fund is basically to invest into or be liquidy provided to this SEO firms so .

That's what the reason why we are very excited about this particular era of security tokens now in this slide it basically shows you to to portion I mentioned about these different structures that you can create on sto so on the left hand side you have the digital equity that you can create or on the right hand middle you have a .

Digitized debt or a digitized fun so two examples you have a real asset or business owners which is what I think the previous speaker has mentioned about the st. Regis Aspen project which is based on real assets or a private credit provider in a form of debt right so in this sense they are able to raise funds from as low as you know 5 million to .

Over 100 million in fundraising now what that means is that imagine these are such samples of credible sto projects right so again we think the same we have the same Regis Aspen project next one is ándara capital and the other one is 22x fund now how many of us actually know about these companies now but they are they are completed projects incredible I .

Would say dividend payouts and stuff like that now imagine when this takes off in a massive scale on the sto environment retail investors given based on the central bank's approvals reaching investors like us will have access to all these projects that we never ever could have access to other than stocks you know under this in exchange so I .

Think this is something that why we are so excited about the next generation fundraising platform is for a business owner but vice-versa for the investors all right so just making just going back another slide now looking at this again in terms of the private market space so there is a huge propensity of growth and .

Opportunity for not just the investor but for the investors in terms of wanting to do fundraising just going back another slide I mentioned about the recurrent triangle that we are looking at so for the company like us because of our our shareholders makeup we are looking at what potentially projects in China Japan and ASEAN meaning to say .

We're looking to basically identify investees to bring it to the market place on sto as well as bringing investors or exposing them to the projects that we identify that's good alright so so in this sense let me just bring it up to this slide again so I think in the next 12 months you will see a few things happening in the .

Marketplace as most of you would have gone through the event hall so you will have people like eyestalks which is a security token exchange with mes licensed going live probably first quarter you have also born value which is a bond tokenized platform that has just also been announced to into the mes sandbox .

These are the exciting stuff that's going to be happening in 2020 which you will see new or I would say up-and-coming investees firms listing on the platform to do fundraising and you will see potentially in new investors coming in to participate in the whole ecosystem as well as potentially looking at new ways of tokenizing right using .

That say Tesla's platform for smart contracts so these are the things that why we are so excited in terms of the sto world it creates a whole new ecosystem of investing and fundraising all right again just to recap some of the interesting projects that has already gone live and completed fundraising and and these are the ones .

That we are looking to also duplicate in terms of identifying which in diversity firms are there out there okay so as our company slogan is we are trying to redefine the future in terms of the digital economy space okay so with that a short presentation to wrap up I think most of you have gone through the event hall and hear a lot of talks so any .

Questions that you guys want to throw at me no these are sample projects that has already done done and dusted so people like the gentleman here with securitize elevator returns yeah so the other ones who actually did the st. Regis project yeah sorry early stage can they come an approach and all they should do go about .

It so the question is for companies that's already gone series 8 for example oh yeah see station it's fine yeah seat station yes okay so for see stage you're still able to sew for a gear example a friend of mine whose company has been running for five years and he just started to run his seat round fundraising but he's been is a company .

Has been running for five years so he's gone a seat round and I'm talking to him to say why don't you go SGO SGO method i mean you have proper revenue stream sorry okay this one is subjective well it's definitely definitely less than the traditional IPO ways yep ah the seed round first of all is you need to find investors right you need to find .

Private equity private equity investors and usually in my own experiences like how we invested our first investment with sorry no no no we are for for my company we are investment management firm so we look into investing into sto firms right so for example we invested into a SGO exchange in Singapore in the we were the .

Third investor within within the fundraising all right and with that we are creating now our next venture into creating a fund management company to do private equity investments into sto firms right so why and that's why we are so excited because the SEO firms if we identify correctly the credible ones which will .

Go through proper valuation proper legal structures where there is it equity or debt and stuff like that yeah sure sure yeah later on yeah so I think going back to a question a seed round company can still look into raising sto seed stage you have to find the investor right and investors it'sit's this case kind of a deal so generally people would be .

Interested in doing sto for seed stage or typically it suit for late stage companies I think the question is will seed stage attract investors correct I would say yes provided you have a solid full disclosure right meaning to say you disclose your business plans how you're going to utilize the funds your valuation is conducted by a professional .

Valuation firm everything is digit as opposed to creating an ICO where item a as I mean no no offense by item s its bottomless but sto you could create a debt which is a bond concept or if you have infrastructure that you have invested in there becomes an asset everything is legalized yeah all right thank you so any other .

Questions by anyone all right if not thank you very much

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