Derek Schloss, the Director of Strategy at Security Token Academy, an educational platform for the security token industry, recently shared his views and insights with Crypto Insider regarding the evolving digital asset industry.
Schloss, an MBA graduate and a Doctor of Law (J.D.) from the University of Oregon, noted that there are “a number of benefits that security tokens and blockchain-based transfers of assets will bring to both our private markets and our public markets.”
“Blockchains And Tokenization” Could Lead To “Significant Disruption”
He believes that “some of these benefits can be attributed to the digitization of the asset itself (tokenization), while other benefits can be attributed to the trustless database [through] which security tokens will trade (blockchains). It’s the combination of these two (tokenization + blockchains) that [could lead to] significant disruption.”
Schloss also argued that “eventually, security tokens trading [on] blockchains will provide new forms of transparency, market fluidity, and cost-savings as compared to our existing private and public markets.”
When questioned about how his team at the Security Token Academy (STA) intends to help people learn more about tokenized economies, Schloss confirmed that his academy is primarily an “educational platform for the security token industry.”
Security Token Academy, An Online And “Events-Driven Organization”
He added that the STA is “an online and events-driven organization dedicated to both covering and facilitating the international evolution of tokenized digital securities. We do this through [holding informative] events, video interviews, weekly newsletters, and insightful case studies and narratives with influential experts and leaders in the security token space. [We also provide] research materials and information in this space.”
Schloss also mentioned that Security Token Academy’s membership program includes many different teams “building the infrastructure for the security token industry — our members include technology providers, secondary trading platforms, private banks, and global law firms. Our membership program provides security token investors, issuers, and enthusiasts the opportunity to learn more about the key security token players in this industry, and the pivotal role they play constructing this new financial evolution.”
Notably, STA’s corporate members include projects such as SeedInvest, TokenSoft, Harbor, Tokeny, Vertalo, and Securrency.
Smart Contracts Can Automate Digital Asset Transfers
In response to a question regarding the potential impact security tokens could have on the future economy, Schloss stated:
“Blockchain technology has forced us to rethink about what’s possible during the exchange of value, regardless of that value’s form. Tokenization allows us to create a digital wrapper around both physical and digital assets. In addition, small pieces of code can digitally enable the performance of valuable contractual deliverables without human engagement, helping automate the trustless transfer of our digital assets.”
Commenting on why smart contracts and tokenization may be important for the future economy, Schloss said:
“Since the earliest days of regulated securities trade, our public and private markets have longed for reduced friction and greater liquidity. Historically, the mechanisms to create and trade financial assets took enormous amounts of energy, expense, and centralized integration.”
According to Schloss: “With security tokens, we find ourselves in a place where every asset imaginable can be seamlessly tokenized and represented digitally. This digital wrapper gives us the power to easily create, configure, and trade these assets frictionlessly, peer to peer. In short, security tokens and blockchain can streamline our current financial markets, and allow us to create a world filled with frictionless value transfer. This [could potentially] have massive implications on our future economy.”
When asked which blockchain platforms might be best suited for issuing security tokens, Schloss told Crypto Insider: “Blockchains make different trade-offs, and specific blockchains may be better for certain security token use cases compared to others. Today, a number of blockchains are being used for the purpose of tokenizing securities, including Ethereum, Stellar, Tezos, Ravencoin, EOS, Cardano—among many others.”
Elaborating on the different use cases for security tokens, Schloss noted:
“A number of use cases for security tokens already exist today.
For commercial real estate, Fluidity Factora’s FACTOR-805 successfully structured and tokenized the debt and equity in a 37-unit Brooklyn residential condo and retail space.
For venture capital, Blockchain Capital — a venture capital firm — successfully raised its third fund, partly by issuing its own security tokens called BCAP.
For startup fundraising, Provenance.io successfully raised $20 million in a Security Token Offering (STO) by selling tokenized equity in its startup, which allows the fintech company to continue development and expansion of its services.”
“These examples include real estate, venture capital, and startup fundraising—however, the possibilities are endless. Security tokens can help create a digital wrapper for global equities, debt, revenue streams, or any physical or digital asset imaginable.”