while a further 30,000 people work inforeign branches of companies basedthere. It has a long-standing customsand currency treaty with Switzerlandand a membership in the EuropeanEconomic Area (EEA), which providesaccess to the European Union market.Prince Michael is convinced

Blockchain will bring a big change tothe financial industry and will particu-larly affect the custody and paymentsector. He thinks that in the future,these functions will be kept separatelyfrom the banking industry. He sees it asa good opportunity to increase effi-ciency in financial services and suspectswe will have a future like the Africansystem with peer-to-peer transactionsand security. However, he reckons the

banking system will still play an impor-tant role in financing and in the case ofprivate banking, personal advice willcertainly remain essential. The tokenwill find a niche to secure propertyrights and ICO’s will be useful, mostlyfor financing in smaller scale ventures

Prince Michael of Liechtenstein isChairman of Industrie- undFinanzkontor Ets., a trust companywith a tradition and expertise in thelong-term and trans-generationalpreservation of wealth, especiallyfamily wealth. He is also the founderand Chairman of GeopoliticalIntelligence Services AG, a geopoliticalconsultancy company andinformation platform.

Karen Jones, founder and CEO ofCitywealth (www.citywealthmag.com)in conversation with James Bowater

Tokeny, the compliant tokenizationplatform, is the European marketleader in delivering an institutional

grade, secure end-to-end platform.Working with clients across fivecontinents, Tokeny has the solutionsrequired for the compliant issuance andservicing of digital securities.The Initial Coin Offering (ICO) market

that exploded last year was aninnovation that represented a greattechnology advancement. Peers couldinstantly trade tokens representingbusiness services, or in other wordsutility tokens, with one another 24/7and 365 days a year. Using blockchaintechnology, this new technologicaladvancement drove more efficientflows of capital from a significantlywider pool of investors. Of course, theproblems that surround ICOs are verywell documented, and some studieshave reported that over 80% werescams.With ICOs now in decline, 2018 has

been called by many as the shift toSecurity Token Offerings (STOs) and it’sa popular notion that by 2030 tokenizedsecurities will be the primary method of

security issuance. To understandtokenized securities, it’s fundamental tounderstand securities. With securities,it’s mandatory to respect the relevantlaws and regulation for everyjurisdiction the assets are issued in, andin every jurisdiction the securities willbe distributed. As you might expect, theexact same process is needed whenissuing tokenized securities.But why replace the financial

infrastructure that has existed for

of using distributed ledger technology(DLT). The ability to fractionalizetangible and illiquid assets throughtokenization can bring liquidity intomarkets that have had little to no accessto it. Furthermore, secondary marketswill also offer increased liquiditythrough a constant 24/7/365 tradingmarket. As one might expect in a growing

industry, the STO market has shownthat there are many players in the spacethat respect rules and regulation, andyou could argue that this reflects signsof maturity in a nascent industry. AtTokeny, we have created the T-REX(Token for Regulated EXchanges), toenforce the compliant transfer ofsecurities on the blockchain. The T-REXstandard is a decentralized set of globaltools, based on the Ethereumblockchain, to allow for theinteroperable, frictionless andcompliant transfer of tokenizedsecurities.We believe blockchain technology is

the foundation of a new financialinfrastructure that will revolutionize theway capital markets operate. Havingrecognized that there are problems inthe industry related to fraud and scams,we have come up with a set of solutionsthat address those pain points,something we believe will help drivemass adoption across the financialindustry.

00 TUESDAY 22 JANUARY 2019FEATURE CITYAM.COM 00TUESDAY 22 JANUARY 2019 FEATURECITYAM.COM

Blockchain, Crypto and ICO’s, which isbeing discussed in Parliament in thefirst quarter of 2019. The law describesthe important features such as tokens,cryptocurrency and ICO’s in detail andthe Liechtenstein Government de-scribes the functionality of the new sys-tem. Anti-money-laundering andcompliance are paramount and the lawfocuses on quality and security. In thisprocess, they want to ensure that onlyqualified, proven and skilled people areallowed to manage the intermediariesin Liechtenstein.Liechtenstein’s 38,000 inhabitants de-

pend on external workforces from Aus-tria and Switzerland. For those

Since last week’s edition of Crypto AM themarket has seen some upward motion butis now back to the same level and, at the

time of writing, Bitcoin (BTC) is trading atUS$3,571.62, Ripple (XRP) at US$0.3199 andEthereum (ETH) at US$122.13 with the overallMarket Cap at US$119.3bn (data source:www.CryptoCompare.com) The holiday interruption is now out ofthe way with the conference and ‘meet up’ season well and trulyunderway where existing projects will be reporting on theirprogress and new innovations with other entrants making theirbig launches. One surprise however, is Ethereum’s much vauntedhard fork Constantinople, which was anticipated to happen lastweek on the 16th January has been officially delayed until 27thFebruary. A hard fork is where the Blockchain splits into two andis essentially a method to fix or improve the protocol such as itssecurity and functionality – the delay of Constantinople stemsfrom an external audit firm’s identification of securityvulnerabilities in one of the five new protocols.27th February is another significant date in the Crypto calendar

as this is the last date for the SEC’s decision on the VanEck BitcoinETF decision although President Trump’s continued shutdown ofthe US Government might well interrupt scheduled business.State business doesn’t seem to be affected though with the majornews that on 18th January Wyoming introduced a Bill SF0125 -Digital assets-existing law (www.wyoleg.gov) described as an “Actrelating to property; classifying digital assets within existing laws;specifying that digital assets are property within the UniformCommercial Code; authorizing security interests in digital assets;establishing an opt-in framework for banks to provide custodialservices for digital asset property as directed custodians;specifying standards and procedures for custodial services underthis act.” The importance of this cannot be overemphasised as thisshould pave the way for banks to be custodians of digital assetsand operate throughout the US. This should make it easier for theSEC to start making the critical regulatory decisions essential forinstitutional adoption.Over the weekend, I ran into Florian Bollen from the German

Kraft micro-brewery in London’s Mercato Metropolitano. As‘Meisters of Purity’ the team there are dedicated to doing thingsproperly using their patented water distillation process and, withsustainability as a core value, they use the heat from thefermentation process to distil London tap water and thewastewater from adjacent gin distillery and bar Jim & Tonic. Theresulting pure water is then mineralised according to recipes usedin both the beer and the gin. What does this have to do withCrypto you ask? The billion dollar global expansion of GermanKraft will be funded by the issuance of asset backed utility tokenscalled Craft Beer Coin. Who said crytpoassets can’t be fun?!

considering relocation to Vaduz, notethat getting residency in Liechtensteinrelies on demonstrating your start-uphas the right skilled people for thecountry and economy.The Principality of Liechtenstein is the

sixth smallest country in the World.Rural and set in an alpine landscapewith its capital Vaduz sitting on theRhine between Switzerland and Aus-tria, it is part of the EEA applying cer-tain EU laws and within the EU internalmarket. As a business centre it has fi-nancial services and a high quality oflife for citizens with the highest GDPper capita in Europe. Thirty large com-panies employ around 8,000 workers,

As governments consider theRegTech of crypto andblockchain, not all is equal. Aswith inward investment visas,those countries with faster

acting governments can step up to at-tract big brand names in this emergingfinancial sector. Two neighbouringcountries, Switzerland and the princi-pality of Liechtenstein, have madestrides to capture early entrants. Prince Michael of Liechtenstein, Chair-

man of Industrie- und Finanzkontor Ets.,a privately-owned trust company with aspecific expertise in wealth preserva-tion, spoke to Karen Jones, Citywealth,Editor and contributor to City A.M.about the plans to attract tech organisa-tions to Vaduz, the capital of Liechten-stein, and his interest in this emergingmarket.Prince Michael’s interest in cryptocur-

rencies was raised in 2013 when the UStreasurer declared Bitcoin ‘dangerous’.At that stage, Prince Michael decided tofind out more about cryptocurrenciesand then realized that the underlyingBlockchain-technology was a develop-ment with enormous potential for dis-ruption.The application of Blockchain in the

financial industry will require someregulation, explains the Prince. How-ever, he warns that regulators are oftenmore concerned about what can gowrong instead of looking at the oppor-tunities. Liechtenstein has addressedthis with regulatory laboratories set upto test potential regulations. He believesit is important to work with the indus-try and start-ups in order to understandthe system and to make the opportuni-ties visible.A less capitalistic approach is being

taken in the principality to help start-ups succeed. Besides having initiated alaw to regulate tokens, cryptocurrenciesand ICOs, Liechtenstein’s legislator hasalso created a new legal instrumentcalled LVC (Liechtenstein Venture Co-op-eratives). The LVC is a legal offering tosupport inventors and investorsthrough a weighted mutual reward sys-tem which includes intellectual prop-erty.As a headline speaker at the Swiss

Blockchain Summit, the Prince has a

longstanding interest in Blockchainfrom a logistics point of view. He seesthat decentralized Blockchain technol-ogy has the potential to replace tradi-tional methods. Having observed thefinancial industry for many years, hesaw it as burdened with bureaucracyand regulation. He thinks the potentialto replace institutions with technologyfor instance in payment systems is real.However, he understands the warinessfrom governments but adds that this isnormal because new technologies al-ways raise fear in the beginning. He ac-knowledges that many might be againstthe rise of Blockchain at first sight.The Liechtenstein Government

favours the development of Know-howin Blockchain within the principalityand has become a pioneer in developinga law on Blockchain in the financial in-dustry. As a liberal country, Liechten-stein sees its role in providing the rightframework. There is a Technopark inVaduz that supports start-up companiesby providing office space and infrastruc-ture. Liechtenstein is also part of the

Technopark-Alliance-Network Switzer-land, the number one location inSwitzerland for the transfer of technol-ogy from academia to practice. There is also a consultation in the

pipeline for the regulation of

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In association with

CITY A.M.’SCRYPTO INSIDER

Crypto A.M. shines its Spotlight on Tokeny

@CityAm_CryptoE:CryptoInsider@cityam.com

JAMES BOWATER

PARTNER CONTENT

Our series on AI, Blockchain, Cryptoassets and Tokenisation

We believe blockchaintechnology is the

foundation of a newfinancial infrastructure

that will revolutionizethe way capital markets

operate

SECURITY TOKENS: RISINGRAPIDLY INTO THE BILLIONS? This weeks ‘Security Tokens Realised’ con-ference is going to be even more interest-ing than I thought when I delivered lastweek’s column – for one very good reason.Blockchain technology has just landed a

whole new asset class... right slap-bangwithin the FCA regulated zone.... and it hasa very familiar face. Familiar to anyonewho’s been keeping up with Fintech devel-opments over the last decade at any rate.An altfin business, Moneybrain.com,

working with sister company JustUs.cohave created a new currency called BiPS.So what?

MARS LANDING?What makes this significant, a world firstin fact, is the joining of the old with thenew. That this, once connected up, willallow practically anyone, anywhere to buyand own a real-world, regulated, fractionalasset!You may recall from last week’s column

(pay attention at the back) that this is anextremely significant step because it openup the field in a way which is unprece-dented. In the case of BiPS, from the UK tothe entire world. From one country to 200,as anyone anywhere can buy a BiP – or asmall fraction of one. Opening propertyinvesting to the world.

ONE SMALL STEP THAT’S AGIANT LEAP FOR MANKINDOf course this is hugely significant forMoneybrain who, as CEO Lee Birkett toldme, already has a lengthening queue atthe door (could BiPS.Moneybrain.com bethe next fintech unicorn?), and is thinkingbigger than ever before. It is even more sig-nificant for the city, Fintech, and the UK –we still have the chance to lead the way,and lead the world!

QUICKLY INTO THE BILLIONSBecause being able to build the new on theestablished is extremely powerful. Prop-erty portfolios, pensions and other fundscan all benefit. Not just from a reductionin costs but from what you might call liq-uidity on steroids.So how has an outfit from the north,

Manchester, taken a world lead in the faceof all the funding from ICO, VCs and theintense interest of the banking sector?Homework! Or rather years of ground-

work paying off in a whole new way. (Ishould point out that I have known Lee foryears and been badgering him for the lastyear or two to pay attention to this‘blockchain thing’, so have ended up ad-vising the BiPS team).

CROWDFUNDING EQUALSFRACTIONAL FUNDING…Because Crowdfunding equals fractionalfunding – in order to Crowdfund a loan ithas to be fractionalised, broken into ‘loanparts’, which must be accounted for. Thisis now well known and well understood –including by regulators, with whom Leehas worked closely over those years toblaze this particular trail.Plug into that blockchain tech in the

form of the BiPS token and it moves to awhole new level. In fact Lee told me thatafter months of development and testingwhen they finally fired up the engine itfelt like the first landing on Mars, and inlight of the significance it’s not difficult tosee why.

There are whole new worlds to explore as aresult. You can start to do so with Lee and I asthe entire interview is now live on ICOrad.io –join us there - or I will be chairing Wednesdayafternoon at this week’s conference:www.SecurityTokensDelivered.com. See youthere! Barry.James@TokenIntelligence.io

A less capitalisticapproach is being

taken in theprincipality to helpstart-ups succeed

Ultimately, and kind of obviously,a decentralised business orecosystem means that there is

no single point of control. With no onesingle point of power, and agovernance model where the majorityof the constituent players need toagree on transactions, it puts thecontrol in the hands of thoseindividuals (nodes) and thereforecreates a more harmonic and fairerway of ensuring that the ecosystem“works”.This concept feels revolutionary. We

have grown up in a world where we areforced to trust central points ofauthority, whether it be government,

the banking system, and even thesocial media platforms where we shareour lives and interact with our friendsand peers.All of these trusted third party’s can

deny you access to their service anytime they want for any reason theywant and there is pretty much nothingyou can do about it. Government’s canrevoke passports, social mediaplatforms can censor you, and bankscan refuse you access to your money.In blockchain technology,

decentralisation is about control.Specifically, who can control thecontents of the ledger? Who canapprove or reject transactions? Who

has control over the protocol? Who hascontrol of the majority of anycryptocurrency? Is control spread outamongst multiple individuals ororganisations? The idea behinddecentralisation is that we don’t needmiddlemen, and by removing them,we can eliminate censorship andauthoritarianism as well as reducefriction in trades.And one last thought:

Decentralisation requires structure andagreement. Decentralisation isachieved through good governance.Governance is one of the mostimportant and least discussed topics inBlockchain technology.

Troy Norcross, Co-Founder Blockchain Rookies

DECENTRALISATION MAY BETHE MOST INTERESTING

FEATURE OF BLOCKCHAIN

After a low volatility regime inSeptember and October the statusquo was abruptly unsettled as

Bitcoin headed south, sheading over 40%of its value. There was a wide array of factors

affecting the markets; the bitcoin cashwar, the concentration risk of the miningpower in a proof-of-work blockchain, thelack of coherence among digitalexchanges for the hard forks and airdropstreatments and the repeated delays forthe development of the lightningnetwork.Negative narrative around the

investigations by the DOJ and the SEC, foralleged misconduct by some large digitalexchanges, dubious ICOs, and jittersaround crypto-collateralized loans, drovethe bulls away. Consecutivepostponements regarding ETF regulationby the SEC did not bring the market rallythat many forecasters, had anticipated. Despite the gloom of the markets, Wirex

has seen more opportunistic buyersdrawn in by an extremely high volatilityregime. Bitcoin Whales (dormantinvestors) are getting more active. This isconfirming our current view for renewedlarge market swings, around the 3000 to4300 levels, with a strong support abovethe 3000-3100 levels where markets

should at least consolidate.The spotlight this week is on Ethereum.Ether initially outperformed its peers

(+11.35% on Monday) ahead of theConstantinople hard fork, however afterthe audit revealed a vulnerability in thecode, developers decided to delay thefork until February, and the priceconsequently readjusted on the 15th (-6.42% on Tuesday).Bitcoin evolved between 3470 and 3774

with lower volumes with still a highvolatility (daily realised annualisedvolatility stable at 0.53), giving directionto LTC, and XRP.Waves announced a $120 million

funding round last month (Dec 19th).Since then, the token has been slowlyreadjusting, catching up on the overallmacro bearish trend (down close to 6%this week). In the medium term, we could see a

strong rally if a positive fundamentalchange happens. There are many positivedrivers in 2019, the Bakkt exchangebacked by the Intercontinental Exchange,it is expected to launch this month.Another driver is the recent rumour thatRussia is considering buying billions inBitcoin as it is allegedly looking to shift itscentral bank’s reserves away from the U.Sdollar.

THE WIREX WEEKLYMARKET VIEW

A Giant Leap for Fintech

decades? With STOs, and the utilizationof blockchain technology, the benefitsare overwhelming. Here I will focus ontwo. Service functions that are currentlycarried out by middlemen can be

automated through blockchaintechnology, reducing costs andincreasing transaction speeds. Thepromise of liquidity, although notcurrently existing today, is a key benefit

PRINCE MICHAEL OF LIECHTENSTEINBACKS BLOCKCHAIN

Luc Falempin, CEO of Tokeny