How Tokenization will Transform Public Offerings

© 2018 Dara Albright Media, All Rights Reserved
Dara Albright
Recognized speaker, writer &
influencer on topics covering
financial disruption, FinTech,
RegTech, Digital/Crowd-
Finance
Darren Marble
CEO, CrowdfundX | Reg A+
IPOs | Security Token
Offerings (STOs) |
Contributor, Business Insider
and Inc.

Webinar Overview
This will be an hour-long webinar designed to help
CPAs understand how digital assets and securities
tokens are transforming corporate finance and how it
will impact their corporate clients. Listeners will gain
a firm understanding of:
• The Cryptocurrency Market
• How the Evolution of Public Offerings led to
Tokenized Securities
• The Types of Token Offerings
• The Present Regulatory Landscape for
Cryptocurrencies
• How to mitigate ICO Fraud
• The crypto advisory ecosystem
• Who is investing in Crypto
• The catalysts enabling crypto to scale and
become a mainstream asset class

@ToTheStoics | @FinTechRevTV
@DaraAlbrightMedia
www.Linkedin.com/in/DaraAlbright
Speaker, writer and influencer on topics
relating to FinTech, RegTech, digital-, peer-
& crowd- finance
About Dara Albright
www.daraalbrightmedia.com
www.fintechREVOLUTION.tv

Blockchain is Even More Disruptive than the
Internet

Why Token Offerings? Why Now?

Token Offerings Didn’t Arrive by Accident
Traditional Paths of Capital Formation in Dire Need of Repair

Token Offerings are the culmination of:
• Conventional financing structures are no longer conducive to today’s
investor market;
• Technological advancement;
• The mass adoption of digital finance;
• An increasing disdain for traditional asset classes, particularly
equities;
• The upsurge of millennial influence;
• Zealousness for Crypto.

The Evolution of Public Offerings

Polling Question #1
• Have your clients expressed interest in the following?
• Bitcoin
• Cryptocurrencies
• ICOs / STOs / Token Offerings
• All of the Above
• None of the Above

THE CRYPTO BUBBLE MYTH

The Mega Crypto Bubble
The World Economic Forum predicts that 10 percent of
the global GDP (approx. $7.8 trillion) will be stored on
the blockchain in less than 10 years.

The Fastest Growing Asset Class in History
Years it took to reach $300 Billion
0
10
20
30
40
50
60
Mutual Funds Junk Bonds ETFs Crypto

Just How Fast is Crypto Growing?
Source: Etherscan.io
According to RT, analysts expect the number of bitcoin users to reach 200 million by 2024,
within the next seven years, given the current exponential growth rate of bitcoin.

You Can Always Gauge the Progression of an
Industry by Growth of its Industry Conferences

Crypto will Eventually Displace Equities as an
Asset Class

5 Reasons Why Crypto Will Ultimately
Displace Equities
1. Because conventional equity markets are broken
2. Because retail investors are no longer into equities
3. Because millennials say so
4. Because sharing is the new black
5. Because the tokenization of everything

1. Traditional Equity Markets are Broken

2. Hey, Equities…Retail Investors are Just Not
that Into You Anymore!
• U.S. households have $900 billion less invested in stocks today than
they did in 2007 - Goldman Sachs
• Demand for Equity-only Funds have steadily declined since 2007
• Investors now hold an average of 52.4% in equity-only funds, down from the
64.7% percent they held in 2007- Fidelity
• Demand for Managed Equity Funds have significantly declined
• Passive funds now comprise about 46% of total mutual fund and ETF assets,
compared with just 8 percent in early 2008 - Morningstar.
• There is $5.4 trillion in AUM in passive funds, up from $1.2 trillion in 2007-
Lipper.

Global Cryptocurrency Market
According to the Blockchain Capital 2017 Survey:
• given the choice of either $1,000 of Bitcoin or $1,000 of a traditional financial
asset:
• 30% of millennials said they would choose Bitcoin over government
bonds;
• 22% would choose Bitcoin over real estate;
• 19% would choose Bitcoin over gold.
• 27% of millennials think that Bitcoin is more trustworthy than big banks
Many Millennials Trust Crypto Over a Number
of Traditional Asset Classes

3. Millennials & Gen Zers Will Inherit the
Earth

4. Sharing is the New Black

5. The Tokenization of EVERYTHING!
Tokenizing real-world assets allows for the fractionalization of assets
and products - enabling small buyers to access assets that they weren’t
ever able to access before. While, at the same time, tokenization
enables sellers to unload assets that were difficult to move in the past
such as real estate, patents, illiquid venture stock, art – you name it.

Polling Question #2
• What would you say is the primary reason preventing you from
recommending a Token Offering to your corporate finance clients?
• Lack of understanding of the cryptocurrency market
• Lack of regulatory clarity in the cryptocurrency market
• Lack of relationships with key cryptocurrency advisors/support
• I don’t know

WHERE ARE THE INSTITUTIONAL
INVESTORS?

Major Institutions are Dipping their Toes in
Crypto Waters

What will Really Fuel the Institutional
Demand for Crypto?
• Regulatory clarity?
• ETF Approval?
• Institutional grade data?
• Enterprise ready infrastructure?
• The true driver is ARBITRAGE!

ISSUING TOKENS
What to consider

Types of Tokens
• Currency Token – Decentralized digital currency ie: Bitcoin
• Security Token – also called equity token, security token or tokenized security
• Utility Token – Used for in-platform purchases
• Asset Token – backed by a real-world asset or product such as gold or real estate
• Reward Token – token that rewards users of blockchain technology. Also referred to as
reputation token.
This is just the beginning…

Types of Tokens

The Regulatory Landscape

Is it a security? Is it not?
“Given the undeveloped nature
of this area, I am wary of any
blanket designation for all
ICOs.”
– SEC Commissioner Hester Peirce
“I believe every ICO I’ve seen is
a security.”
– SEC Chairman Jay Clayton

Proceeding in an Uncertain Regulatory
Regime

Err on the Side of Caution & Assume All Token
Offerings Will Be Deemed Securities
• 506c
• Least expensive
• Prior SEC approval is not required
• Can raise unlimited amounts
• Only accredited investors can participate in the offering
• Resale restrictions / liquidity issues
• Reg A+ (Tier II)
• More expensive
• Must be pre-approved by the SEC
• Can raise up to $50M
• Unaccredited investors can participate in the offering (investment limitations)
• Ongoing reporting requirements
• Audited financial statements
• Reg CF
• Depending on how much is raised, it can become cost prohibited
• Unaccredited investors can participate in the offering (investment limitations)
• Low Offering thresholds ($1M)
• Audited financials and limited reporting requirements may be required
• Look Outside the U.S.
*Disclaimer: The information contained in this presentation is provided for informational purposes only, and should not be construed as legal advice
on any subject matter and should certainly not be used as a substitute for competent legal advice from a licensed securities attorney.

Perhaps the Question is not whether all Token
Offerings should be deemed securities, but
whether all securities should be tokenized?

Tokenizing Wall Street
“The Security Token Thesis” by Professor Stephen McKeon
• 24/7 markets
• Fractional ownership
• Rapid settlement
• Reduction in direct costs
• Increased liquidity and market depth
• Automated compliance
• Asset interoperability
• Expansion of the design space for security contracts

We are Witnessing A Truly Historic Moment in
the History of Finance!

Learn More

@ToTheStoics | @FinTechRevTV
@DaraAlbrightMedia
www.Linkedin.com/in/DaraAlbright
Speaker, writer and influencer on topics
relating to FinTech, RegTech, digital-, peer-
& crowd- finance
About Dara Albright
www.daraalbrightmedia.com
www.fintechREVOLUTION.tv
Thank you!
Let’s connect:

Polling Question #3
• What do you believe concerns your clients most about capital raising
via a token offering?
• Regulatory Uncertainty
• Lack of familiarity with the cryptocurrency ecosystem
• None of the Above
• All of the Above

Polling Question #4
• What action step do you plan to take as a result of this webinar?
• More research
• Discuss with clients
• Not sure
• Nothing

Polling Question #5
• What do you consider to be the most valuable part of today’s
webinar?

How Tokenization will Transform Public Offerings

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