Co-founder and CEO of Republic talks the future of STOs
My guest today is Ken Nguyen from Republic. Republic is a platform that allows any non-accredited investor to invest in exciting new startups. They’ve worked with a handful of awesome companies that we know and love and I thought this was a great podcast explaining how you can get involved with Republic too.
Aside from the Republic platform, we talk regulation in the U.S. vs. globally; where Ken sees this fundraising model going in the future; thoughts on the growth of STOs later this year and next; and finally we take a fun trip into the future landing at Oct 25, 2019, grabbing some of Ken’s thoughts on where he sees this industry being at that point.
You can take a look at the 14 or so projects they have available on their site, Republic.co.
Check out our comprehensive list of ICOs at icoalert.com
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The ICO Alert Podcast showcases exclusive, in-depth interviews with founders of past, present, and future Initial Coin Offerings. The podcast is hosted by Mike Finch, Co-Founder of ICO Alert. If you’d like, you can request a guest to appear on a future episode by emailing firstname.lastname@example.org.
Mike: Hello, you can see me! I'm finally catching up on the video stuff here, like the other Roundtablers, and everything, so not as cool and with all of the graphics and whatnot that they have going on, I'm just too busy for that. You know, they don't really do anything so, they can afford to throw all of that in there. But for those who don't know, this is the ICO Alert podcast. I'm your host, Mike Finch, COO and co-founder of ICO Alert, and you know, you might ask who or what is ICO Alert, right? Well, we're a team of 14 cryptocurrency enthusiasts and entrepreneurs here in Pittsburgh, Pennsylvania that really want to see this industry continue to grow. We're a company that aims to help move this awesome new fundraising model forward. So if you invest as a retail, accredited, or institutional investor, we provide tools and resources to help you do so. If you're an ICO or STO, we offer consulting, marketing and much more to help solve the problems that you face trying to raise funding for your new project. We provide content to watch, read and listen to, and definitely collect a ton of data on every ICO that has ever existed. Our ... I think we have over 5,000 now in the system, you know, good and bad.
So, if you'd like to connect, feel free to drop us an email at team@ICOalert, or you can tweet us at our username @ICOalert. If you have questions for me, feel free to tweet me @thatfinchguy, and of course, nothing on this podcast should be considered investment advice, or any other piece of advice.
Okee Dokey, my guest today was Ken Wyn from Republic. Now Republic is a platform that allows any non accredited investor to invest in exciting new startups. For those that don't know, there's an accreditation process that you know, you don't really have to fill out a form or anything like this, but it's kind of way to allow the rich to get richer, right. It doesn't allow you to invest if you don't have something like a net worth of a million dollars or you know, you're not making 250k or 300k, something like that. So, Republic is not for those accredited investors, it's for non accredited investors right, people like you and I, whether you've got 10 bucks, 100 bucks, 1000 bucks, you can invest it in these awesome new start ups. They've worked with a handful of really cool companies that we know and love, so I thought this was a really cool podcast explaining how you can start to get involved with Republic too.
Aside from their platform, we talk regulation in the U.S. versus you know, globally, where Ken sees all this crypto fundraising model going in the future, his thoughts on the state of STOs overall, some really awesome stuff, some exciting news coming from him later this year next, and finally we take kind of fun trip looking into the future landing at October 25th, 2019, getting some of his thoughts on where he sees the industry at that point. So, if you want to learn more, check out Republic.co. That's the website URL. They've got about 14 or so projects up there ready for investment. So, as always enjoy.
Alrighty, we are with Ken from Republic. Ken how are you today?
Ken: Doing great. Thank you so much for having me Mike.
Mike: Of course. Yeah of course. Really excited to dig into republic and all the things that you guys have going on, but before we get there, per usual, tell us a little bit about your background and how you got into crypto, what you did before Republic, all that fun stuff.
Ken: Oh definitely. I started out as a securities litigator in New York at [inaudible 00:01:02]. I went into asset management, took a stint in academia a stint for ... And then I became the first non-engineer hire in AngelList when they got an enforcement letter from the SEC. I became their general council and helped their company navigate some pretty complex legal issues. But a lot of that, surprisingly enough, irrelevant to what we're dealing with today in the crypto space, and then in 2016 spun out to launch Republic and we launched Republic Crypto in 2017.
Mike: Got you. So, what are the difference between those three different set ups, AngelList, Republic, and Republic Crypto?
Ken: Great question. AngelList is known among other things to help start ups fund raise, but from accredited investors only, millionaires so to speak. So the law changed in 2016 that allowed everyday people, doesn't matter what income or net worth, that you can now invest in private stock. So when we launched Republic in 2016, the focus was on traditional tech startups. It's just that, that same legal framework now helps everyday people to invest in tokens, in ICOs, because ICOs and token sales are securities offerings by current standard.
Mike: Got it. Okay. Very cool. What are your thoughts on kind of the different set ups just like Republic has right? I know there's a couple other competing sites out there like StartEngine and I think we saw yesterday that SeedInvest is being purchased by Circle. How are you guys different and where do you see yourselves fitting in?
Ken: It's such a [inaudible 00:02:57] space and the way I look at FinTech is that it's half legal, half engineering. In the crypto world it's probably 60, 70% legal and the rest is product engineering in business. So the ability to navigate at the edge of securities law and technology, not to step to far that you end up violating in a irreversible way relevant legal framework and yet moving enough with a level of risk that you can be ahead of the pack and I think Republic's internal legal expertise, our venture network, our depth in technology, the combination is probably second to none in the space. That said, it's very early on. The game is still up for grabs. We don't report to say that we lead the space, you know we're just happy to be a participant and it's up to each investor in each start up and project to pick the platform that speak out the most to them.
Mike: Got it. Got it, and let's back up for a second then. What is Republic's business model for those who haven't seen the site?
Ken: The core business model is to help whether a blockchain project, or a normal startup, fundraise from retail supporters, users, community. Basically, currently it's the only way that our projects like [inaudible 00:04:31], can compliantly sell tokens to their non accredited supporters. So anyone, anywhere around the world can invest as little as 10, 20 dollars in a token sale or in equity in a startup that we feature on our platform.
Mike: Got you, okay, and for those out there who haven't seen Republic.co, or CoinList, or StartEngine, or any of these others, but maybe they came into the space from buying bitcoin whenever and have discovered ICOs now. So, one of the biggest questions that I get is as our position at ICO and obviously we're discovering engine for ICOs right, and Republic, or CoinList or some of these others, why are you guys needed if ICOs are this ... it's own brand new decentralized fundraising model, what's the problem that you guys are solving in the space and why should investors look to Republic, versus just going directly to the ICO site, or what not.
Ken: Oh that's a great question. Do you know back in 2016 as you know Mike, the billions in funding into token sale around the world by individuals from China to California, from Alaska to Alabama, freely openly participated. It seemed to live up to the spirit of decentralization that the that blockchain is a technology promised. But unfortunately the application of the relevant securities lost in the U.S. means that many if not all of those offerings would done in a illegal or non compliant manner. Essentially that raise to main risks for the company and for investors. If you conduct a offering, a sale of securities tokens in a non-compliant manner, the SEC can shut you down and leave the investor empty handed, or the lawyers representative of early investor may file a lawsuit asking for money back and so if you're investor but you still have money in this project, is it going to worth anything? No, it's most likely going to be worth zero.
Ken: So as an investor, you want to make sure that whichever project that you're investing in, are they doing things in a compliant manner so that there's no undue legal risk they're taking on, and currently in the U.S. any project that's seeking to distribute tokens from airdrops, to mining, to bounty programs, to non-accredited investor meaning engineers at Berkeley, and Stanford and beyond. You know most of these people [inaudible 00:07:16] accredited. They have to do so through a license platform like Republic, and today really, we're one of the only three that I'm aware of that have every facilitated these type of offerings.
Mike: Are there those platforms out there that are doing the same thing that aren't licensed in the U.S., do you know?
Ken: Most ICOs around the world are being conducted in a non-compliant manner. You see projects in China and Korea selling and getting tokens into the hand of your best residents, obviously non-compliant. If they never become big enough then all fine and good. If they ever become big enough to gain the attention of the CSS, they [inaudible 00:08:01].
Mike: Sure, yeah absolutely, and it's interesting, I would argue that a lot of times you see the U.S. as the leader in new tech, right. You have a entire state in California that dominates this and brings investors from all over the world, but here now in crypto, the U.S. is kind of slowly or quickly, depending on how you look at it falling behind, especially when it comes to this new fundraising model. Right this new tokenized fundraising model of sorts. So, how do you adjust your business based on that? Are you guys solely focused on the U.S. because you know you can grab that user market, or do you still act as that global fundraising platform?
Ken: Mike, I ... if I may address the first point that you said about the U.S. seemingly falling behind in this space.
Ken: [crosstalk 00:09:01] at one point appeared as such, maybe 2017 early 2018, but I think things have shifted in that their next wave, their next thing that's going to bring forth mainstream adoption of blockchain, is something known as security token offerings STO. So people talk a lot about these days about STO in the U.S. [crosstalk 00:09:27] as a non security token, especially with respect to new tokens. But, the rest of the world increasingly is trying or moving slowly toward the U.S. model. You see China now cranking down on ICOs and token offering activities. So projects in China, what used to ignore the U.S. ecosystem as a market, now very actively look at the U.S. and are thinking of even moving the operation to the U.S, so I think that the U.S. will continue to play a leading role in this space as a technology compared to what they have there in tech in general in the past. So to answer your second question about Republic's model, from day one our view is that most token sales are likely going to be doing security offering and turns it our we're right. So, today we're the only platform that's launched the most and the biggest, the most credible type of project that's available to retail beginning with props and most recently with quarters in our platform today.
Mike: Got you. Yeah that's Props by YouNow, and what was the second project?
Ken: Yeah so we launch a three projects, Props, Witnet, W - I - T - N - E - T, and CoinVest, C - O - I - N - V - E - S - T. All three campaigns close out the maximum one million dollars available to retail within hours or days. No other platform had been able to do that. Currently active on Republic are two additional crypto projects. One is called Quarters, I say a universal token for gaming and the other one is Nori, N - O - R - I. Again, there's no other active token sale available to retail investor in a compliant manner in the U.S. [inaudible 00:11:25].
Mike: Got it. Got it, and that one million dollars is a key point. We've talked about this in previous podcasts. There was on that just came out with Darren Marble and Eric Faust where Darren does a great job of going into these different crowd funding regulations, but Ken, for those that don't know, why is that million dollars the maximum that projects can raise through your platform?
Ken: A very quick recap, there are only three ways a company can sell shares, securities, may it be a stock, or may it be a new token to everyday people to non-millionaires in the U.S., number one is to file for an IPO via a public company and then you can sell whatever you want. You know, like Apple and Google. The second threshold is to do a campaign called [inaudible 00:12:17]. The cost of that, particularly for token project [inaudible 00:12:21] a million dollars in legal filing fees and it takes about six or eight months to prepare. So not far from doing an IPO and then you can raise up to 50 million dollars, and soon 75 million dollars, which is a lot of money of course, right. But that's a lot of time and a lot of these out of pocket costs. The third way, which is what Republic today does, is called [inaudible 00:12:48] or Regulation Crowd Funding. It takes about $5000.00 in two weeks or three weeks to launch a campaign, and you currently can only raise up to about a million dollars, a 1.07 from retail investors. On the side you can raise an unlimited amount from millionaires and from venture funds, but the campaign to raise from everyday people has ought to be on license platform like Republic and is currently capped at just about a million.
Mike: Got it. Okay, and then from your seat, I don't know how much hand you still have in this now, but what is it that you're looking for in projects to list on Republic, maybe they're ... It's a project out there now who's like many considering do I try to do a ICO, but obviously not target the U.S. or other similar regulatory sanctioned countries I guess if you will, do I do a security token, but how do I do that? Or do I go with a platform like Republic? You know.
Ken: I get three types of projects that are getting my attention in the Republic team's attention right now. One category involves already established projects with huge communities. You know the hash graph, the file [inaudible 00:14:10] of the world, and now they just want to either airdrops or do a sale just to engage their community, but they really don't care about that million dollars at all.
Ken: So that's one category. The second one involves new project that potentially will be life changing for underdeveloped communities, kind of like impact driven project that $100, 000.00 or $200, 000.00 for them is a lot of money, because they base in Nigeria or Latin America, and we can help them raise that small amounts to build out a community, so that they can come back, raise more and get the [inaudible 00:14:56] funding, and do a [inaudible 00:14:58] token sale.
Ken: And the third type of projects that involve a real life asset, to give you an example, a building in midtown Manhattan that's tokenized, and selling 20 million dollars worth of this building to the world, one component of that goes on Republic and available to everyday people. That we find very interesting because it's relatable, it's easy to understand, and that's what's going to get your retired dentist in Alaska to finally buy a crypto asset. He and she aren't ever going to be able to buy, at least not in the next couple years, grasp and be excited by block stack or [inaudible 00:15:44] coins, or things that are really for us the inner circle to understand and participate.
Mike: Got you. Okay, so then on the projects that you see come through that you don't accept right, what are some of the top things that maybe projects make a mistake about, or just don't apply for republic, and why?
Ken: I think any project that had done an offering in the U.S. in a non-compliant manner almost always is an automatic disqualifier, and we see a lot of those applications coming in, but just a little too late for them now to come in and trying to ... it's unnecessary and it's not good for Republic either. But the second type would be projects that doesn't have true substance. They can be amazing at building a community during using various promotion or a marketing tactic, slap on a highly aggressive projection of revenue, of market potential, disrupting trillion dollar sector, but without technical substance to back that up, more commonly you think that, that amazing marketing people out there who aim to build technology, but without technical team members on the team. I would say those who are the most common type that we generally would say no to very quickly.
Mike: That first one then, are those ... those are projects then that have ICO'd before, maybe in 2017 and are looking to raise money again?
Ken: Correct, or that they ... now that they're like hey, maybe we just want to be more compliant [inaudible 00:17:31] campaign, and somehow have that be a solution to non-compliance in the past. There may be some merit to it, but we ... it's just not our main focus right now to address that market sector.
Mike: Right, so personally then, where do you see these projects that have this stain on them if you will, this regulatory stain, where do you see these projects going? You know, because they're startups right, most are not going to last. You know, 95% of startups don't make it, but that 5%, or that 4%, or whatever say right, that ran an ICO under certainly a lot of regulatory uncertainty, now they're not being picked up by platforms like you. Other investors maybe are kind of weary. Is ... Do you think that there's a chance that the SEC could come back and come with fines or sanctions on some of these companies, or do you think the SEC might kind of say, well, forget about it. You're grandfathered in. Any projects moving forward now that we get this space, they're going to see those fines?
Ken: You know, I obviously wouldn't able to answer with any credibility on what the CSS may do, but if I were to put myself in the position of those projects, you know founders, this is what I ... It's the risk of the SEC going after to sanction projects that didn't comply but don't involve any fraudulent, or overtly objectionable activities, then it's very low, because they have ... You know, it's a small team. They have a few thousand people, but the enforcement team, the audit team at most a few hundred people, that's ... We have a lot of projects in the U.S. and beyond. So the risk is relatively low. I would lay low, build out my product, my business, and if there's a opportunity to really grow and be a ... If not a [inaudible 00:19:38], perhaps conduct what is direct A plus campaign and then convert all of your former tokens funnel, fold it into this new larger offering. So essentially all of the all securities offer by the company at that point, now are done on a compliant fashion in the U.S. and outside. Today, though there's still no direct A plus campaign for crypto that's been approved by the SEC, but I imagine that in 2019 it will be easier, cheaper, with more time I think SEC will be more open to that.
Mike: Got you, and I want to touch back real quick, and then enough on the regulation. I want to get back to some of the projects that you're seeing coming through Republic but, you had mentioned earlier that there are a lot of other countries starting towards the way that the U.S. seems to be handling this with just considering everything a security token and even if they don't say go after those ICOs that raised in a non-compliant fashion, they're at least setting some standards now hopefully. What have you seen with those other countries on a first hand basis, or have heard from other people as examples of these other countries moving towards this model?
Ken: Let me use another large economy, so the U.S. it is what it is. China, huge economy and now pretty much bending active trading in crypto assets among its people. Japan, [crosstalk 00:21:17] until very recently, earlier this year about six months ago, ICO's in Japan were largely unregulated, similar to Singapore. Then there was a major hack of an exchange Coincheck, and that really raised a red flag for regulators there. So essentially their approach to my understanding in Japan is that any ICO that had been ... that was conducted in the past, you know, basically a free pass. Going forward in order to do either a foreign project or a Japanese project to offer it in Japan, you have to get this insane exchange license that's completely cost prohibitive.
Ken: So currently, essentially there's a practical ban on ICO to Japanese resident, a country where this huge appetite at the individual levels of crypto assets, I have no doubt that there are more Japanese owning crypto assets than there are American. You know, [crosstalk 00:22:18] Korean house own crypto asset in the U.S. I'm sure is in the single digit, and probably the low single digit. So, you can see how in a country like Japan that things can change over night drastically, I do think that overtime that Japanese regulations will be a bit more relaxed and allow for more. And you can see regulations in free for all jurisdiction like Singapore getting a little bit more conservative and overtime they'll be a global standard you know, but you're not going to see that over the next six months and probably not the next year.
Mike: Yeah that would be my follow up question I guess, is you have Singapore, Malta, Bermuda, Cost Rica we've seen, [inaudible 00:23:07], there are so many now often smaller countries right, who are putting into place these regulatory structures that are very favorable to ICO companies, right. I think [inaudible 00:23:19] probably made the biggest splash by having to move their office out of China and moving to Malta, and Bermuda, and all these different places right. So, I guess looking into the future here, if we start to see the United States, Japan, China, even go so far as to say a lot of the other U.S. allies that maybe follow the line that the U.S. follows from a regulatory standpoint, if that all happens, how does that harm those other countries then who say have a positive regulatory environment for incorporation of these projects, but doesn't really do the project any good because now they can't market to consumers in the U.S., Japan, yada yada yada. I mean it's almost kind of like this war of worlds where some people are saying, hey do whatever the hell you want, and then other folks are saying well, you know, you have to fit within our structure.
Ken: I'm sure my view here is one that a lot of people will take issues with, and I'm sure that [inaudible 00:24:32] also not a fully informed, because I'm ... You know, my view, my perspectives are so U.S. centric, but I think [crosstalk 00:24:39] project or any exchange that thinks that they can just set up a [inaudible 00:24:47] came in, which is a well known jurisdiction, Malta, and somehow managed to avoid U.S. law, U.S. framework. I'd be very surprised if any informed project is taking that view in the long term, meaning if they're doing that, they're doing that to optimize on [inaudible 00:25:16] activities and revenue, and then with the role of being compliant. But it takes time, so when you launch a new project, whether it's an exchange or a new protocol, if you wait and get the answer in the perfect [inaudible 00:25:31] from lawyers, you're going to be so far behind and it's going [crosstalk 00:25:35] incredibly expensive.
Ken: So, if you reasonably take some risks, those are jurisdictions set up shop there, pretend like you don't actually actively market in any of the major jurisdiction and the people just come to you, and you're sitting there on an island and therefore you're not subject to anyone else's jurisdiction, maybe that's a way to get some business going, get really flowing in. But undoubtedly as the ecosystem, the technology, and the blockchain as a truly an ecosystem [inaudible 00:26:04], U.S. law, Canadian law, you know, U.K. laws will come to apply in so far that people of those country actively participate in these so called offshore businesses, or exchanges. So long way ... long winded way of saying that the jurisdictional focus right now, I think is very [inaudible 00:26:25], and it does come with a significant risk for any project that thinks that they can not ignore U.S. law and do business elsewhere, and yet at the same time, knowingly distribute tokens into the hands of U.S. [inaudible 00:26:39].
Mike: Got you. Yeah that's ... I think that's definitely a good perspective. It's one that I would agree with. The thing that I kind of struggle with is, that you have cryptocurrency, you have bitcoin, you have all of these different tokens and projects with a core underpinning of decentralization right, who not all kind of aim for that certainly, but that's a core underpinning of cryptocurrency. So when you have this naturally decentralized unstructured, from a regulatory standpoint, industry that then tries to fit into that, there's going to be problems. It's going to be interesting in the coming years, because even let's say let's take any company who goes to Malta, Bermuda whatever right, Singapore, not marketing to the U.S. doesn't necessarily mean that you're not going to have U.S. users on your site, because I mean be it just something simple like a VPN or otherwise right, it's very easy for people to still access your site. So, you know-
Ken: [crosstalk 00:27:52] if there's a U.S. person that owns somehow a few tokens, and he or she has a relative who's a lawyer, a plaintiff, and ambulance chaser, and two years from now they're like, oh let's file a lawsuit because here's a U.S. person. Was that offering [inaudible 00:28:07] accordance with U.S. law, [crosstalk 00:28:09] a lawsuit in New York, or in California I mean just the headache that comes with it.
Mike: Right yeah.
Ken: One country that's been really overlooked, and that's Australia. It ... The rules and regulations around ICOs, and blockchain, very relaxed, and Australia has much more credibility with U.S. regulators than Bermuda, or Malta, or even Singapore. Right, I mean it's a major ally. So, using their framework as an example to convince a legislator, regulators in the U.S. to adopt a more giving view I think is probably an approach that should be done more.
Mike: Do you know offhand what the positive regulatory framework in Australia is for ICOs?
Ken: I just ... Yeah I know generally that it's pretty much almost as relaxed as Singapore.
Mike: That's interesting. You don't hear about that. I mean I know they're like very far away and all that right, but that's ... Yeah that's super interesting. I'll have to take a look at that. Cool okay, so looking at Republic then right, as you guys try to take this blockchain fundraising model if you will right, and put it under a structure that isn't going to go blow up in everybody's faces down the road, be you an investor, or a project founder, or you know, whatever, right. What are you guys looking at past the platform you have now, right? So say for example an exchange, because I think one of the benefits that comes with security tokens is liquidity. Right? You can kind move in and out, but there are obviously certain [inaudible 00:29:57] periods are that are different with security tokens than ICOs. Have you guys thought about offering a secondary market of any kind so that people can take that startup, and as it grows and sees its shareholders increase their shares in value, do you think there's a need there?
Ken: Well certainly there's a huge need, given that all the offerings on Republic are deemed to be security offerings. So these tokens have to be traded on regulated secondary platforms, may it be a full blown exchange, an ATS through a broker dealer, et cetera. Republic's focus has been and probably will be for the foreseeable future primary. You know the secondary exchange, or securities exchange landscape in the U.S. is quite competitive. There are very, very credible players working at it. I can name a few. Some of them are quite close to us, so I don't we're going to build out one on our own. That's not our core expertise. I have no doubt that there will be at least one or two exchange that we will partner with, [inaudible 00:31:18] as cue one and cue two 2019.
Mike: Oh okay. Awesome. Is that locked in or ...
Ken: The ... From what I can tell and I probably can name you know, almost a dozen exchanges, or exchanges want to be working on that license. Some of them have been working on it for over a year, and having just some information on how that process is progressing with the relative people at SEC, I would think that it would a few months, probably less for one of these entities to be able to say we actually opened [inaudible 00:32:02] for business and can trade, and can take on security tokens in the U.S.
Mike: That's awesome. That's great to hear because in the previous podcasts we've had where we've talked a lot about security tokens, and I think most would agree with this is that because of the added regulation and the added structure that's needed, it's going to take longer for all of the third party pieces, kind of the pick and shovel companies if you will to get going and really see all of the necessary infrastructure bloom. But if that's ... If we're talking months away now, that's beautiful, that's awesome.
Ken: You know Mike, a months away from an exchange having the framework to operate legally, but you're completely right that you know, the decide ... the players in an exchange ecosystem like market maker, you know OTC, because you need liquidity in order for a listed token to actively trade and stand in increasing value, building that liquidity goes beyond just the framework of that exchange. The exchange is necessary, but that's only step one and I know that obviously on the side between OTC and Bds, a lot of people are building that up. I do think that in the first half of 2019, we're going to see a listing that is actively traded that's considered new security token here in the U.S.
Mike: Got you. Let's talk about that liquidity right, and the people who are investing in these projects. From your perspective, well let's start right kind of the way I see it right, to kind of give some context here, right so you have the broad cryptocurrency community, people who bought bitcoin in 2010, people who are just hearing about it now, people who are very interested in cryptocurrency as a whole right. Then you obviously have your quote unquote big money, your institutional money, right your VCs, your capital groups, your family offices, and then of course your Goldmans who are now moving in through [inaudible 00:34:10] and other routes, right. For security tokens and this need of liquidity on exchanges, do you think both the cryptocurrency audience and this kind of quote unquote big money audience will be trading these security tokens, or do you think it, is there another type of investor, or type of user that is the focus for these.
Ken: I definitely do think that there will be appetite. There has already been. I do think that the [inaudible 00:34:44] of the world would be a little slower to deploy [crosstalk 00:34:49] into a newly listed token of a new project. They probably compare to like say, there capital deployment into a new IPO listing. On the other hand, there's whole new categories of either family offices or ultra high network individuals around the world, right. So you're talking about say for example, an upper middle class family in China, that sits on say 20 million dollars in whatever net worth and income. Before ... if you compare it to the traditional equity market, probably most market makers, and dealers, and BD, most of them haven't gotten to that level of that far reach sources of [inaudible 00:35:38], to sell traditional equities. But now in the crypto space, I think these networks of very wealthy individuals, or the middle tier of institution, are very interested, and have been participating aggressively in ICOs and crypto assets [inaudible 00:35:55] for security token as well.
Mike: Okay yeah, I would definitely agree there, right. VCs, family offices, I mean that example of a upper middle class, or you know, upper class family with that kind of money definitely participating, I think they might participate through a wealth manager, or this kind who's then obviously tied in. Some good context here too is you know, like you said, that traditional start up or project that say is no longer a start up, but now is offering some equity for sale, they're kind of stuck in their network, right, the traditional equity for those who don't know is very relationship focused, right. It's all about who you know as is the case in many other parts of life, but through security tokens now, now this can very much be distributed. So yeah, a hundred percent agree with you there. On the cryptocurrency front, for those you know like crypto Twitter, or something that's always talked about right? Very passionate people who are doing anything from working on regulation for crypto, to just being an anonymous account who has been a trader for a while, and will take pictures from their yacht or whatever, right. This kind of crypto community, like whole hearted crypto focused, do you see them wanting a piece of the security token action, or do you think they'll kind of push away because it you know, tastes too much like the traditional capital markets?
Ken: I think overtime ... So in short, I do think that they will participate, because there's no other way of doing business in the long run in the U.S. [inaudible 00:37:47]. It's not like there's such a thing called utility token in the U.S. that can be just traded willy nilly. I know that a number of exchanges out there are still listing utility tokens, and that they may be located wherever, outside of the U.S. but at one point the people in DC will be paying a lot more attention. So my prediction is that some point in 2019 token activities in the U.S. all fall under this framework. It's such a massive market. It's such a ... And there's so many projects coming out of the U.S. that are promising, particularly still in Silicon Valley. So I think that crypto enthusiasts will participate and it will be easier. It's not like buying stock that you have to go to fidelity uploading all of this information. blockchain leveraged security token, KYCAML accreditation, all of that will be far more streamlined and also far more portable so that when you buy and trade it among different counterparties, among different exchanges, it's a seamless process for individuals. So I do think that the world is moving very much toward security tokens, all things being security tokens, but the process of investing and participating will get easier, and easier, easier over time compared to what it is for public stock.
Mike: Got you. So what are these investors then, if they want to go onto your site now, I think when I checked today there was 14 different projects that were on there now. I'm sure you've got a lot lined up too. What do they have to do to start investing in these projects? Is there KYCAML I imagine, is it pretty simple, what's the process?
Ken: [inaudible 00:39:32] the difference about Republic, what's somewhat unique about Republic is that we accept investment amounts as little as 10 or 20 dollars so that the [crosstalk 00:39:41] encourage engagement. People can actually even invest using their credit card, if the amount of investment is that small. So the ... Because the amount of investment is so small, it's [inaudible 00:39:54] to encourage participation and the threshold [inaudible 00:40:00] necessarily is a little lower in terms of the complexity of it. So anyone can within less than two minutes complete a transaction, invest on Republic whether in equity or in crypto, which is something that, that cannot be done with a lot more money on [inaudible 00:40:18] platforms.
Mike: Nice so you can do it with [inaudible 00:40:21] or Crypto?
Ken: Correct, correct. Yeah and you know, someone in a foreign country they typically don't use ... or may not use credit card. [inaudible 00:40:33] transfer cost 35, 50 bucks. So investing using bitcoin or [inaudible 00:40:38] may be super easy.
Mike: Yeah, yeah definitely it'll be way cheaper, even with some serious network congestion or high fees, or whatever so.
Mike: That's ... Yeah, that's awesome. So they ... they're just going to Republic.co, there's a sign up process, two minutes, is that the time we're holding you to?
Ken: Oh no the sign up process is like ten seconds to fully invest.
Mike: Oh wow.
Ken: That is [crosstalk 00:41:00] you see a deal you like, you read up on it, and you're like you know what? I really love for example Quarters, the CEO is 12 years old. This is the [crosstalk 00:41:10] 12 years old in the U.S., but you know, he's a not your adult founder. So if you're like, I love the project, though I'm not sure that this is highly unusual. I want to invest 20 dollars, just 20 bucks. It literally would take less than two minutes to complete your whole transaction and call it a day. So I'll go [crosstalk 00:41:31] Amazon but for investing, as quickly, as simply, as seamlessly as Amazon buying a product.
Mike: Got you. What was it like whenever you saw Quarters come through and the CEO was 12 years old, what was that experience like?
Ken: You know, I ... It was ... I bursted out laughing, and at the beginning I'm like this cannot be serious, and then looking into it, and the kid, and I shouldn't use that term because you know, it is suggests me being disrespectful-
Mike: He's a young man, yeah.
Ken: [crosstalk 00:42:04] Yeah, this young man has raised as a really [inaudible 00:42:11] thank you Mike. This young man [crosstalk 00:42:13] privately almost half a million dollars from celebrities, from influencer, you know. So the credibility and what he had done before coming to Republic really surprised and impressed me, and you know before [inaudible 00:42:31], I worked for the founder of [inaudible 00:42:34], who founded Sky in his mid-late 70s, and sold it some eight years later for hundreds of millions. So combining the two story it just kind of like, it's never too early, or never too late to an entrepreneur. You know, just do your thing.
Mike: Yeah, yeah, that's awesome man. Very cool. So, an investor comes on, they sign up very quickly, they're able to invest very quickly, you know, like you said in very small amounts if they'd like to. What happens after that right? So somebody who has invested in a project that was on Republic say a couple months ago, are they able to talk to the team? What happens after that process?
Ken: Yeah, so the whole platform is ... has been designed to encourage communications between investors and founders, both during the campaign as well as after. So we have a quarterly, obviously reminder to send out to founders, to send an update to the investor, investor can always reach out and communicate with the founders directly facilitated by the platform. If it's a token investment, and it's time to issue the token, we facilitate the wallet collection process and make sure that this investor received their tokens, what they do with the tokens afterward is you know, their problem, right, their concerns. If it's an investment in a traditional tech startup, usually it's a long holding cycle right, a couple years before the start up gets acquired, or goes IPO. So doing that entire process, we facilitate an ongoing update and dialogue between the two sides.
Mike: Got you. Okay. Have you guys had a project where they issued a token and then that token was traded on a secondary exchange, be it large or small?
Ken: So we have only launched CoinVest tokens I believe are now actively traded on an exchange, on one or more exchange. I have to take a close look, CoinVest is the third project I did. [inaudible 00:44:57] has yet to issue the tokens, but [inaudible 00:45:01] is a very mature project as you know with like some 60 million users ... or 40 million users I think. The ... So we expect that to be as soon as it's listed on an exchange, on a compliant exchange, that investor will see the benefit and return for it immediately.
Mike: Got you. A couple questions now just on the general industry I guess, if you will. What projects have you seen, not necessarily that you're targeting with Republic, but just have seen from your perspective that you're super excited about that exists within the blockchain space?
Ken: That a really good question in terms of like actual implementation, like you know, something that you ... that ... It has a real life implication. I have to say I haven't seen anything quite yet. Crypto [inaudible 00:45:59] which I do like, but that's probably the most the often sided real life implementation, and that's ... I think it can be much more exciting than that. We see a project in the pipeline, that's working on a very low cost, but hard wallet, but it's very simple to do and combine with your phone. So the ... What they're able to do is basically a square for crypto, that pretty much in countries like or regions like Africa, or Latin America. Most people now do have smart phone and if they use that they can bypass the whole banking system, and be able to conduct business transaction similar to how Square had enabled small businesses in the U.S. to take credit card very quickly. So that I think I do ... I'm trying to pay more and more attention on projects, and projects that improve the underserved.
Mike: Got you. Okay and then three kind of quick fire questions here for you. I want to look into the future again. So, a year from now, let's see, what's today, 25th. So October 25th, 2019, fast forward, close your eyes, here we go. Right, real quick fire here, as best as you can. Will we have official, final regulatory clarity from the SEC or whomever in the U.S.?
Mike: Man I was hoping you'd say yes. Everybody's waiting for it. Will bitcoin still be the largest market cap cryptocurrency out?
Mike: How many projects will Republic have on it's site?
Mike: 80, very nice. Okay, cool. Well that was a ... that was expert. Thank you for that. We're going to come back to 2018.
Ken: [crosstalk 00:48:03]
Mike: Well cool, listen Ken, this has been fantastic. Really great to get your perspective to hear more about Republic and what you guys have going on, and obviously a industry here that is kind of starting to shift one way or another towards security tokens in the U.S. and elsewhere, and then you know, also kind of having this waring regulation from Singapore, or Malta, or these other areas. So, it's been fantastic to hear from you. For those investors who want to start checking out your platform, and then also for those projects who want to apply, what are the best two ways to get a hold of you or the team?
Ken: Yeah, so if you just even submit an application on [inaudible 00:48:48] Republic.co, .co, and just put in there saying that you coming through from ICO Alert where I'll prioritize it into due diligence. I'm also at email@example.com, .co, and even though my inbox is currently pretty overwhelming, I promise if you send me an email that I will get back. It may take a few days, but I will get back to everyone and just generally so grateful for people's support and interest in Republic, and you know love the work that you Mike and ICO Alert have been doing. So, really an honor to be here.
Mike: Beautiful. Beautiful. Well thanks a lot. Appreciate the kind words and we'll talk soon.
Ken: Thank you so much. Have a wonderful week.