Listen to this articleSecurrency is a leading developer of institutional-grade blockchain-based financial and regulatory technology that supports the compliant issuance and trading of digital securities. Below is our recent interview with Patrick Campos, Chief Strategy Officer of Securrency:
Q: Could you provide our readers with a brief introduction to Securrency?
A: We have built a very unique identity and compliance framework that automates critical compliance functions by allowing these digital securities to govern themselves in accordance with built-in policies to enforce transactional parameters and regulatory rules across multiple jurisdictions. We call this framework an identity and compliance “mesh” that allows different types of systems – blockchain and non-blockchain – to interoperate with each other, which ensures that these digital assets can move where they need to move without losing their core compliance characteristics. From this basic framework, we are also building robust downstream issuance and trading tools so market participants can very conveniently access all of these capabilities. Because Securrency’s system is so lightweight yet comprehensive, we can deliver our technology in software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-as-service, depending upon the particular client’s needs. We are built to support large institutional customers, but we have also created a system that can be accessed easily by smaller market participants.
Q: You’ve recently raised $17.6m in Series A round; could you tell us something more?
A: This funding is obviously important to Securrency to support our ongoing development and operational requirements, but I believe that it is particularly significant that the round was led by WisdomTree, a high-profile, highly-credible asset manager. This reflects our view that, while the sell side has attracted a lot of early attention in the digital securities space, the buy side will be the real catalyst to the widespread adoption of these important technologies. The bottom line is that the market needs recognizable products that already enjoy substantial liquidity, so ETFs are a logical and exciting use case. Most of the ETF-related digital securities activity has been focused on cryptocurrency ETFs, and WisdomTree has been active in this space in Europe. However, we feel strongly that both regulators and market participants will find traditional assets packaged in this new format to be extremely palatable in these early days. This will not only attract the large, household-name exchanges, transfer agents, and investment services providers, but will also make it easier and safer for a much broader base of investors to begin to participate in these digital investment products that can be held and traded from individual wallets. In the end, it is adherence to the highest standards of compliance that will make this effort work, and we are fortunate to be partnered with WisdomTree, a world-class company that, from top to bottom, ascribes to its CEO’s laser-focus on the highest-standards of compliance – a focus that squares perfectly with Securrency’s core ethos.
Q: Why do you want to transform global financial markets?
A: I would hesitate to say that “transformation” is what we seek. Rather, we believe that the markets are already so highly-efficient that digital securities technology must contribute first and foremost to decreasing systemic costs by streamlining processes, thus both improving margins for financial services providers and retaining more value in the market. The second major objective is to harness these efficiencies to make participation in financial markets more convenient and transparent, which not only makes it easier for participation by a broader base of investors in the private markets – and the SEC’s recent moves to redefine accredited investor status certainly anticipates this eventuality – but pushes capital markets participation out to the edges in the global markets. We hope that this will be transformational in the long run, but the near-term objectives are more incremental in nature, and it is important to keep this in mind so we can move past the hype and toward the mature, professional adoption of these technologies.
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Q: What exactly is Securrency Interoperating System and how does it work?
A: The Securrency Interoperating System is a term we use to describe a fundamental philosophical difference between Securrency’s approach and the approach that many other technology companies and institutions have adopted. Much of the debate in this space has centered around public chain versus private-permissioned chain, but we view that debate as missing the forest for the trees. We believe the discussion that really matters is around open-framework compliance and identity solutions versus “walled garden” systems that restrict policy enforcement to a particular blockchain or system. As noted earlier, we have built an identity and compliance “mesh” that allows market participants to easily plug into a compliance framework irrespective of the system they are using or the blockchain on which the particular security has been created – the key is allowing the relevant regulatory and transactional policies associated with that security to be portable and enforced at any point in the transactional cycle at which they need to be enforced. We accomplish this through our off-chain identity and credentialing tools, as well as with our InfinXchange rails to allow easy API connection by financial services providers into this common framework. The second part of this is making it easy and convenient to create these policies without having to undergo the highly-inefficient process of writing smart contracts for each new asset. Our Rules Engine is a plain-language abstraction layer that allows companies and their lawyers and other advisors to not only rapidly create policies but to be able to readily audit those policies and update them on-the-fly. This level of convenience is essential for widespread adoption. The resulting universal “mesh” is what we call the Securrency Interoperating System and contains both open-sourced identity and compliance components and private bespoke components that Securrency can create and deliver to customers.
Q: How will blockchain technology affect our lives?
A: This is an incredibly broad question! Blockchain technology has captured the imagination of many around the world and has been hailed by some as a transformational panacea for just about every field of human endeavor and panned by others as an over-hyped inefficient technology that cannot deliver sufficient efficiency benefits at scale to be much more than a niche play. We think that both views are exaggerated. As Securrency is focused on the financial services sector, I will limit my comments to that space. Much of the negativity has sprung up around what we view as early mistakes that have been made by technology companies and institutions looking to avail themselves of the benefits of blockchain technology. As I have previously asserted, we think that the false choice between ascribing to the “one chain to rule them all” theory and building a sophisticated proprietary permissioned blockchain has led to much of this disillusionment. We also think that there is a great deal of fantastic non-blockchain innovation in, for example, payment systems that leads many to wonder if any further efficiencies are too miniscule to be worth wringing out of the system. We believe simply that this is the wrong way to look at it. Interoperability means not having to make these false choices and allowing systems to talk to each other in a seamless way. In this sense, we hope that stimulating wider adoption of digital securities will lead to distributed financial services which, in turn will create a new generation of financial markets participants. This must begin by winning the easy battles – for example, trade finance is a perfect use case for blockchain technology that is ready to be deployed and that will return a tremendous amount of value to the system. In an indirect way, we will feel that positive impact on our lives through a growing global economy. If we peer down the road, we can picture a day in the not-so-distant future on which individual investors can hold digital securities in individual wallets and use them with the same efficiency as cash, which, I expect, will have a more direct impact on our lives.
Q: What are your plans for the future?
A: Well, the first step is to work very closely with WisdomTree and our other institutional partners to secure regulatory approvals and deploy some very high-profile digital assets. We will also be looking more broadly and creating an industry group to create broader awareness around the concept of an open-framework identity and compliance mesh, which will necessitate close work with national and international regulators, and to stimulate closer collaboration among market participants by leveraging this concept. We call this group the Digital Securities Compliance Alliance, or “DiSCA”, and we hope you will be hearing much more about this in the coming months. We will also be securing regulatory approvals in the US and the Abu Dhabi Global Market to help support deployment of our technologies. All of this will require continued growth and enhanced operational capabilities, so the closing of this Series A round comes at a very important time for Securrency.
Last Updated on March 15, 2020
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