1. Why the decision to create one of the first security tokens?
At the very beginning of our involvement in the area of distributed ledger technology back in 2018, we were trying to understand what opportunities blockchain can present in a real life. The results of our analysis showed that one particular subclass of crypto assets - security tokens are an ideal vehicle for both capital seekers and capital providers. We found the value in their potential for global market penetration, fractional ownership, keeping transparent and immutable records or possible purchases by cryptocurrencies. What is important for us, from regulatory perspective security tokens comply with respective security laws and regulations. While considering the trading, token holders can place the trading orders 24/7 and the executed trades benefit from extremely fast settlement without the need for an intermediary. Our decision was proved to be right by a natural development from first initial coin offerings (ICOs) towards fully licensed and regulatory compliant security token offerings (STOs). As security tokens are a digital form of securities, they need to pass through a strict approval process set by regulators to be widely accepted by institutional investors.
2. How would you describe a security token in a simple language?
The security token is actually a security but in a digital form. Traditional securities like stocks and bonds can be issued as security tokens and have a digital form. As digital assets their value is derived from an underlying asset. Such tokens can be traded and are subject to regulations governing securities. Security tokens can provide many applications - the most promising are tokens as a digital representation of company shares, issued debt or securities representing a cash flow generating underlying asset.
3. What are the main advantages of your project?
The most important one - the Silvero security token is one of the first of its kind generating the yield of 6% p.a. The yield comes from the cash flow generated by the underlying asset. We still witness many projects being at the stage of a business idea or a plan. And this is very different for underlying asset as company Silverside is. It is an existing and cash generating underlying business with track record and license from National Bank of Slovakia. It is active in the regulated field of providing consumer loans in its home market. Another advantage of our project is that the proprietary blockchain Silvero is running on was developed as public while accessible only for a limited number of community members as our investors and partners are. The delegated proof of stake (DPoS) and various other features represent the edge over competitive technologies. For example, the speed of processing, extremely low transaction fees compared to Ethereum, low environmental impact or no computing complexity of Bitcoin are the main highlights.
4. You have developed your own investment platform BitPolis. What is the meaning of the name BitPolis?
The name BitPolis consists of two parts: "Bit" as a computation unit of information and a public space that aptly characterizes the Greek word “Polis”. Polis is a place where people meet, lecture and transfer thoughts and innovations, and also trade. In this sense, it perfectly describes the essence of our new digital platform, which BitPolis stands for.
5. What are the main advantages of BitPolis?
It is an investment platform that can carry digital as well as traditional financial assets. It is secure, intuitive and easily accessible. One of the additional features we intend to implement in the future will be a proprietary decentralized exchange. The platform itself uses a unique proprietary blockchain. On the other hand, all necessary KYC/AML processes form an integral part with primary focus on fast and reliable approval of applications. For example, a visual verification of documents and ID-check in global databases (e.g. AML Watchlists, etc.). The platform will be run by a Swiss based, licensed and regulatory compliant entity that will provide our long-term investors with additional trust and clarity.
6. How does it work?
The process is indeed simple and similar to how the crypto exchanges operate. A security token is listed on the BitPolis investment platform. A client then creates an account and his identity is verified through the KYC/AML process. Only after verification and approval the client is able to purchase the security token(s). Currently, the payments can be made as wire transfers but we are also planning to add the option to pay in Bitcoins. Silvero is the first but not the last security token to be listed on BitPolis. As part of our business strategy, we anticipate to list other Arca Capital security tokens that will be directly linked to various lines of business. Besides that, several financial institutions and relevant partners would also be able to list their traditional investment instruments as bonds, mutual funds or other types of securities directly on BitPolis. At the same time to address the increasing interest from third parties, we also invite the companies to express their interest in listing their security tokens on our platform.
7. You seem to have a positive view on cryptocurrencies and their future. Would you be able to predict how the market for digital assets would look like in three years?
I believe we can expect very dynamic development as we are still at the beginning. Whether we speak about the coins, utility or security tokens, other digital assets or simply about blockchain as a technology. There are more and more new ways of potential use being discovered every day. It may have all started with Bitcoin, now for many a store of value, Ethereum as an ecosystem to build applications on or as a project of Japanese banks called Ripple.
A very good example are stablecoins and project Libra from consortium lead by Facebook. Libra may be seen as a basket of currencies but the real value comes from creating a cross-border ecosystem that is independent from any government. The governor of Bank of Japan expressed his thoughts as following: “If Libra is introduced, it could have a huge impact on society.”
8. One of the most frequent questions about cryptocurrencies is the security of digital assets. Are cryptocurrencies secure and risk free?
From technical perspective the access is secured by advanced features including two-factor authentication together with hardware-enabled security options like Trezor. Our unique blockchain has improved security and its private nature limits the number of validators to our community members. Among other features are BitPolis wallet, key management or the fact that the wallet pasword is known to the holder only. The hacking and stolen assets are caused by security breaches at exchanges and not by the failure of technology of blockchain as such.
9. The first security token which investors would be able to buy on investment platform BitPolis will be Silvero. Is Silvero a safe investment?
Silvero (SVR) is a security token backed by an existing cash-flow generating asset – company Silverside, a regulated consumer loan provider. It is a digital representation of the liability to Silverside and can be classified as bond or fixed income instrument. Silvero and other tokens available on BitPolis will be fully regulatory compliant under Swiss legislation and holding the approval from FINMA.
10. Is BitPolis just a trendy and hot project to attract new clients and customers or have you already commenced to explore further opportunities in digital assets space?
Yes, we have already started. We are actively looking to expand our activities and among others for example, to build the decentralized exchange (DEX), list more Arca Capital security tokens or add security tokens issued by third parties. Our goal is to make BitPolis a recognized investment platform and ecosystem not only for institutional investors.
11. First cryptocurrencies were known for their aspiration to become global decentralized payment solutions but the market for them is characterized by high degree of centralization and manipulation and not even mentioning the hacking scandals that resulted in lost funds. How did you address this situation?
The security along with the trusted long-term relationship with our clients, partners and investors is an utmost priority for us. With this respect we run the underlying business as well as develop the platform. In other words, we do not want to compromise on security because of simplicity of the use.
12. The blockchain technology and digital assets are only slowly penetrating into our daily lives with significant lack of knowledge and certain level of scepticism among general public.
We had many discussions how to position ourselves within this new field. Here, we found the clarity and support directly from the owner of Arca Capital group Mr Rastislav Velic. He recognizes the potential of new technologies and opportunities that come with them at the group strategy level. His positive stance, support and openness to new things are vital to the whole project.
13. Despite of the stunning digital assets market growth the basic IT knowledge and skills are needed. Do you think this may represent a limiting factor of further grow in the future?
We strive to develop the platform which will be simple, easy to use and intuitive. We do so as we know there are many people who are not IT skilled and using a platform for digital assets may be a great challenge for them.
14. What is the client target group for BitPolis or who are the sweet spot clients for Silvero?
The STO addresses all categories of investors, preferably qualified and professional from all around Europe that pass the KYC/AML-test and are interested in investing indirectly in the consumer loan market in Slovakia.
15. Where do Silvero investors come from?
There are currently no limitations envisaged for investors but during the initial phase we focus on investors and clients from Switzerland and EU countries.
16. BitPolis is a Swiss based entity. Is it due to the fact that Switzerland is known for its openness to crypto assets or was it more based on a purely pragmatic approach to strategic investment decision to target potential local investors?
First of all, Switzerland is a leader in crypto legislation and regulators there have a positive and open stance towards digital assets. For example, we have chosen Canton Zug as a base for our Swiss activities as it is known as Crypto Valley. Did you know that Swiss people call themselves a Crypto nation? That is also something that helps our project. Also from corporate world the SIX Exchange is working step by step to accommodate digital assets. More info available at: https://www.coindesk.com/swiss-stock-exchange-sixlaunches-digital-assets-exchange-prototype All in all it comes as no surprise that Libra Association is based in Switzerland as well.
17. As the issuance of security tokens is a licensed activity and subject to regulatory oversight how far are you in the approval process?
We had started the whole regulatory and approval process with detailed analysis from PwC Switzerland. Subsequently, we have requested the ruling from Federal Tax Administration over tax situation and treatment of the proposed structure. We also expect to receive the decision related to No-action request from FINMA in the coming weeks. As the work on new Securities Act has not been finished yet, the approval of Silvero prospectus will be the next step on the whole regulatory, legal and compliance journey.
18. Who are BitPolis and Silvero team members?
While building the team we looked for true professionals with team spirit, drive, dedication as well as right skills and experience. That is why we have complemented the expertise of our Senior members of executive and finance team with the added value which Senior members of IT and blockchain team from 01People contribute to the success of our project.
19. When do you plan to start the official sales period?
We expect the official start on 1st of January 2020 after meeting all necessary regulatory requirements. The next step will be passporting of prospectus to EU countries, so the EU based investors will have a possibility to invest in Silvero as well.
20. Are you ready for the future?
I can say with all my respect that we have made the first step and developed the investment platform BitPolis. We will also be issuing the Silvero security token at the beginning of the next year. After successfully completing this stage we will continue with broadening our product and service offering and adding new features, so our clients and prospective investors can benefit as well.