You’ve no doubt heard of cryptocurrencies by now – that weird, digital currency that went from being only used for buying drugs and paying off hitmen to now being common talk at restaurants and bars all over the world, with legitimate business groups investing millions into the digital tokens. Values in cryptocurrencies continue to skyrocket and new ICOs are popping up almost daily. Yet, there is still a huge disconnect when it comes to the general public, traditional banking institutions and investors. Some of this is due to digital currencies still being difficult to spend for the general public, but it is also because traditional investors are still a bit wary to invest in a currency that has almost zero regulation worldwide.
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It’s also important to note that adoption of cryptocurrencies relies on these factors or else it will never fully reach its potential. This new era does bring with it one thing – entrepreneurs and startups around the world looking for solutions to these problems. In something as young as digital currencies, these same teams will be the ones to shape this new digital, financial landscape.
Take, for example, Canadian-based company, TokenFunder, who recently obtained approval from the Ontario Securities Commission (OSC) to offer an initial token offering for their coin, the FNDR token. TokenFunder joins British compliance startup Coinfirm in the space of an emerging field called RegTech. Basically, these regulation technology companies are working on bridging the gap between the deregulated world of crypto and traditional markets and investment channels. While many digital currency advocates are going to have issues with increased regulations and the outlining of rules, as the money invested in crypto grows, so does the spotlight, and with that digital currency companies will have to find easier, cost efficient ways to navigate such confusion pathways.
While cryptocurrencies can be a great vehicle for moving value from place to place, it is not nearly as efficient a storage method of value simply due to the current volatility of the digital marketplace. This volatility is one thing that keeps traditional heavyweight investors from adopting this new economy. It is simply hard to justify investing in something that could tank before it even gets off the ground, especially when dealing with a market that has no regulations. That’s where startups like the Jibrel Network and CyberTrust come into play. These companies are mixing traditional wealth management with tokens to establish a network that provides value and more importantly, stability and regulation.
CyberTrust will be managing this through the use of their token – the Global Crypto Note (GCN). Investors will be able to purchase them like basically all current tokens and digital currencies, but their value will be tied to the cryptocurrency they are representing. At present, that includes Bitcoin, Etherium, and BitcoinCash, but will continue to be expanded as currencies establish themselves. This token differentiates itself in one major way, however, it is an investment tool that is both regulated and audited. Basically, institutional investors will be able to diversify into cryptocurrencies without the regulatory difficulties of actually owning them. GCN will also include an ISIN (the number associated with any security), auditability, and have a pass-through tax structure adding to its legitimacy.
Jibrel takes a different approach, but it still works towards the goal of giving investors a stable platform to invest. The company will be creating PwC audited, KYC/AML compliant tokens that are basically created through the value of real world assets. These tokens are called Crypto Depository Receipts (CryDRs) and they will have these traditional regulations baked into the tokens from creation. Investors would be able to take their assets and tokenize them knowing that the rules are embedded with compliance, and therefore, some level of safety. It can also keep these high level investors from facing hefty fines in places where compliance can be a grey area.
The last piece of the puzzle to help bring token adoption to the mainstream is the ease-of-use factor. If I have $400 in Bitcoin and another $500 in Etherium, how do I spend it? Yeah, I can go through the process of selling the contents of my cryptowallet where these assets are stored, but that will take days and the coat I want to buy is on the shelf in front of me. It has not been until recently that companies have started to tackle quick ways to spend cryptocurrency and with it, digital currency advocates are one step closer to bringing the dream of a decentralized currency to the mainstream
Companies like CryptoPay and TenX are both startups looking to create actual debit cards that can spend Bitcoin and other cryptocurrencies as quickly and easily as we spend money from our traditional bank accounts. The one big issue with this, like many of the issues that revolve around digital currencies, is that the market can swing quickly and harshly – but it’s when you start tying in everything from this article that you can start to see the big picture that can help stabilize and streamline this emerging financial market and bring it to the forefront.
This post is part of our contributor series. The views expressed are the author's own and not necessarily shared by TNW.