Building a Regulatory-Compliant Initial Token Offering Platform in Canada
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TokenFunder is a Canadian leader in the securitized digital token industry, currently building an innovative blockchain-powered market platform on which it plans to launch and manage regulatory-compliant initial token offerings (ITOs), one of the latest trends in financial services. Similar to an initial coin offering (ICO), an ITO is the organized sale of digital tokens—which represent conventional assets, financial instruments or services—in exchange for digital or real-world currency. Unlike ICOs, however, ITOs differ in that they are not cryptocurrency-based and their tokens act as a tool that allows different functions, like efficient capital funding and effective governance.
The first to be approved by the Ontario Securities Commission in November 2017, Toronto-based TokenFunder’s platform is regulatory-compliant. Its current and future regulated token offerings will be considered as securities, which will provide investors with the appropriate disclosures based on best practices. The offerings will also enable efficient capital acquisition, work within standardized processes, and ensure transparency and auditability through TokenFunder’s strategic partnerships with financial institutions, legal entities and regulatory bodies.
Following its current ITO—due to be closed on April 30, 2018—TokenFunder will use its proceeds to further develop its Smart Token Asset Management Platform (STAMP) as a deliverable service to potential clients. The company’s target market segments include innovative startups, rapidly-growing businesses and established organizations looking for disruptive funding solutions.
TokenFunder is led by a management team with vast cross-industry business transformation experience and deep insight into developing disruptive technologies. This includes CEO Alan Wunsche, who is a blockchain, ICO and ITO expert as well as a fintech startup executive and consultant.
- First ITO platform to be approved by Ontario Securities Commission
- Regulated token offering provides added assurances to investors including transparency, cost savings and investor protections
- Proceeds of $10 million ITO to be used for further developing platform to be delivered as a SaaS to other entrepreneurs
- Led by experienced management team with access to industry leading practices
The Transformation of the Financial Securities Industry
Like many industries facing disruption stemming from blockchain technology and cryptocurrencies, the investment and financial securities markets are beginning to explore the potential of incorporating digital tokens and cryptoassets, and other disrupting forces. In 2017, for instance, the Canadian Securities Advisors (CSA) issued statements regarding the applicability of securities laws on cryptocurrencies, the BC Securities commission announced the first registration of a Canadian investment fund manager focused solely on cryptocurrency investments, and the Chicago Board Options Exchange (CBOE) introduced futures trading on Bitcoin.
In the realm of cryptocurrencies, ICOs have raised a total $6.4 billion in the past four years, and $4 billion of that was raised in 2017 alone. On a global scale, investors in token offerings are able to fund ventures directly with cryptocurrency, bypassing traditional intermediaries.
There are many expected changes on the horizon for this year, including the involvement of federal governments in the cryptocurrency sphere. BIS Research has said that countries like Russia, Japan and China are exploring the possibility of issuing national digital currencies on the blockchain, which would compete against existing cryptocurrencies.
In TokenFunder’s vision of the future, digital tokens—like the FNDR token—will exist side by side with traditional securities and later become the standard measure of value.
Having been the first to receive approval for an ITO from the Ontario Securities Commission in November 2017, TokenFunder has launched its ITO which is due to close on April 30, 2018. With it’s pan-Canada Decision Order from the CSA, TokenFunder is able to accept funding from retail as well as accredited investors, from Canada and throughout the world. TokenFunder applies a KYC identity verification and suitability check to enhance investor protections. The ITO is capped at $10 million, offering a total 200 million FNDR tokens that can be purchased with Canadian dollars or Ether, the Ethereum cryptocurrency. FNDR tokens are regulated security tokens linked to the offering memorandum, the holders of which will receive 80 percent of TokenFunder’s distributions and certain voting rights.
What happens after the ITO?
Proceeds from this ITO will be used to further develop TokenFunder’s STAMP, and to conduct compliance, marketing and operations activities. Once developed, STAMP will be available as a low-cost, regulatory-compliant and blockchain-based Software-as-a-Service (SaaS) delivery for entrepreneurs looking to raise capital in an innovative and transparent manner. The platform will be based on Ethereum’s blockchain technology, incorporating their Smart Contracts and Smart Tokens to provide assurance features to investors.
With the goal of developing a token market ecosystem that integrates financial and legal partners that help enforce accountability, TokenFunder seeks to play a key role in driving innovation and revolutionizing the financial securities industry. As regulated security exchanges look towards incorporating decentralized, blockchain-based systems and using tokens to represent the value of businesses, there is ample opportunity for TokenFunder to deploy its regulatory-compliant ITO platform.
Target markets for TokenFunder’s STAMP include innovative startups with a high-likelihood of requiring funding to complete key milestones and de-risk the company, rapidly-growing companies looking for innovative funding options, and established companies looking to transition to token securities once they become a more common-place approach to funding.
Alan Wunsche is a Blockchain, ICO, ITO, cryptofinance expert, fintech startup executive and consultant. He is also Chair & Co-Founder of Blockchain Canada, a Canadian federal not-for-profit corporation with a mission to connect Canadian Blockchain Innovators and to help Canada be a leader in blockchain technology, and Canadian Chair of ISO TC307 Blockchain Standards Committee. He is also known for being a cross-functional fintech executive with strategic business acumen and transformational change leadership experience at Scotiabank, PwC, Deloitte, Microsoft, Sprint and tech startups. As a technology-centric Chartered Professional Accountant, Alan has been a successful strategic, process design & organizational change leader, specialized in finance, business intelligence, analytics and enterprise information systems. Throughout his career, he designed and delivered user-centric, data-driven applications with leading edge information management technologies. He is an expert in blockchain (e.g. Ethereum), smart contracts, cryptocurrency, digital wallets, full-stack web applications.
Laura Pratt—COO & Co-Founder
Russell W. Drew – Legal
Bill Swirsky—Capital Markets & Financial
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