The listing of securities on international and local exchanges has been a stable and powerful instrument for companies to attract additional investments. However, with the introduction of blockchain approaches to fundraising, it seems that conventional institutions might have to free up some space in the market. After some negative feedback from the community about the rise of fraudulent ICO cases, there has been an initiative to create specific regulations for listing security tokens in an attempt to ensure their credibility. Still, this process of approval might be a bit tedious. That’s where our guest comes in. Our guest today is Juan Engelbrecht, the CEO of MOBU – decentralized platform for launching security tokens. We’re going to cover topics such as how securities work, what makes security token distinct, why it’s hard to list a security token, and how the legal system affects our lives.
Hi, Juan! Thank you for talking with us today. First, before talking about MOBU itself, let’s talk about you and your team. Why have you decided to get started with blockchain technology in the first place? And why have you shifted from providing mining equipment with Zaber to become a platform for security tokens? Also, how has your team been assembled? Have you known each other before starting Mobu?
Good morning! We have a very strong team that have all had successful business dealings in the past. We still own all of the mining farms, but we have shifted our main focus to MOBU as there is a huge demand for MOBU in the market and its growth potential is tremendous. We have come to realize how difficult it is doing a worldwide-compliant security token, so from there we discovered the need for MOBU in the market.
Now let’s move onto the main course – the project itself. What do you want to achieve by creating easier means of establishing ICOs related to security token? Is it just a profitable way of being a better middleman, or do you have plans on creating an institutional power over some sectors of the blockchain industry? And where does the “MOBU” name come from? Is there some hidden meaning there?
MOBU means “to grow from the ground up” in one of our nine local South African languages, called “Sotho.” I think it is very relevant and to the point. By allowing more compliant security tokens to the blockchain, MOBU will allow trillions of dollars to flow into the blockchain in the form of real sustainable businesses and allow for the cryptocurrency market to become more stable. For companies converting to security tokens instead of conventional shares will automatically remove middlemen with blockchain technology. The MOB20 protocol will be the guideline of rules and regulations that assists in the process.
Why should a company choose a security token over just “moving their business on the blockchain” by creating their own dApp with a utility token that has fundraising potential? What are the pros and cons that the utility and security tokens have?
Being a part of a well-known protocol, MOB20 will allow for easier listing on the security token exchanges in the future. The question will always remain how compliant they have been during their ICO and risk the potential of a regulatory penalty or fine. By going with MOBU, they will have the support of MOBU and have the peace of mind knowing that they comply with legislation. MOBU has extra features like the unique escrow and access to the competitive marketplace to ensure that only vetted and trusted service providers will guide you through the process.
It seems that we’ve been using the term “security token” a lot without actually discussing its meaning. If our concept of them is correct, then they are a less roundabout and easier way of getting investments, as opposed to the conventional securities. But they are still underused, unregulated, and not trusted that much by the general public. If we look at it in a securities vs. security token perspective, then how can you describe them both from the “pros/cons” perspective, and what advantages might security tokens bring in the future?
Fees are lower – The total costs of launching a successful ICO is a lot more cost effective in raising funds than IPOs. Most IPO costs originate from the payments owed to middlemen like bank institutions. Security tokens remove the need for most bankers which lower fees while smart contracts may decrease the reliance on lawyers in future. Smart contracts decrease the complexity, costs, and paperwork with managing securities (collecting signatures, wiring funds, mailing distribution checks, etc.).
Transfers are instantaneous – By removing the middlemen from investment transactions, issuers are able to conclude quicker timelines to successfully offer their security. Instant and prompt trade settlements on the secondary market for security tokens will become an attractive advantage for both issuers and investors.
Exposure to the free market – It’s challenging for investors in Asia to invest in private US companies or real estate. Therefore, most investment transactions today lack exposure to a global investor base. With security tokens, asset owners simply market their deals to anyone with an Internet connection. This free market exposure will lead to a notable reform in asset valuations since any asset that is not exposed to a free market is inaccurately priced.
The investor base is larger – ICOs now raise more capital than IPOs. The potential investor base is drastically increased when asset owners can present deals to anyone with an Internet connection. It is obvious that asset owners prefer to show his or her investment opportunity to every potential investor in the world and not be restricted to only US accredited investors and institutions. Competition is healthy and beneficial for financial markets in the long term.
Service functions are automated – With security tokens, issuers will start to use smart contracts to automate the service provider functions through software. In most transactions, lawyers are less like middlemen and more like service providers. This does not necessarily indicate that lawyers will cease to exist, but rather that their function will be more advisory based.
Decreased manipulation by financial institutions – The likelihood for corruption and manipulation by financial institutions is decreased if those institutions are removed from the investment transaction process.
It’s now time to ask about precisely what services Mobu provides and which of them are the most crucial for the aspiring ICO creator. Let’s assume that we are Firm A and we want to list a security token, but we have no clue on how to do that. What help can you provide?
People often underestimate the value of a good protocol. The HTTP protocol defined the Internet as we know it today. The MOB20 protocol will define the security token market 10 years from now. The ICO issuer will have access to all legal, escrow, technical-providers, and KYC providers to launch a compliant security token. These providers’ pricings will be at lower cost and of better quality than what the current ICO environment offers, and they will go through a due diligence process by the MOBU team to ensure lower barriers to entry going forward. Good ICOs on the MOBU platform may even receive financial support in the form of a seed investment to ensure the successful launch of their ICO. The goal of MOBU is to develop a strong ecosystem, and we will definitely invest in strong projects.
Let’s go deeper into the legal aspect of the deal. How could MOBU provide assistance to projects in order for them to pass the Howey test? Does it involve legal services or some other approach? How does it work in terms of the platform format? It’s also worth mentioning that holding some kind of legal power can make the process much smoother. With that in mind, do you have some legal power backing you?
We have partnerships with Barnard Inc and Axis Legal, and we will establish many more in the future. We will treat all tokens as security tokens on the MOBU platform in order to ensure compliance, thus the need for the Howey test will be irrelevant. In terms of the ecosystem, legal providers will earn MOBU tokens for offering their services and we will have authorized centers around the world for SEC exemptions and ensuring compliance. MOBU will support Reg S, Reg D, and Reg A+ compliant security token offerings, and with the incorporated ability to select experienced legal counsel across multiple jurisdictions within the platform, token issuers can be sure that they are creating compliant tokens within their local jurisdiction.
The MOBU token is a utility token that is used via MOBU platforms that is created “to secure” the legal status of other security tokens. That sounds complicated. Why have you decided to use a blockchain solution in your business model? What benefits does it have? Why do you need to use the blockchain, and doesn’t this bring scalability issues? Could you support them all?
In case of MOBU, we’re using the Ethereum blockchain to create a set of rules that govern the issuance of security tokens and to program them into smart contracts so they are transparent and immutable. We definitely won’t have any scalability issues going forward, and we can relatively easily move to EOS or WANCHAIN if the Ethereum network gives us any issues in this regard.
Overall, there seems to be a lot of projects trying to create a platform to support security tokens while conventional institutions might try to develop more accessible services. How do you think your competition will manage? Or do you think that this market is big enough to create a diverse ecosystem with no harsh competition?
We are a complete end-to-end solution that has addressed all the issues of both the security token and ICO markets. We have plenty of competitive analysis articles available on the Internet, but I strongly believe the market of 80 trillion USD is big enough for more than one player. But, also, we already have strong, confirmed issuers giving immediate value to our offering. Amazon survived the tech bubble by being a strong company with a strong offering. They grew relatively slowly, but they focused on doing the right things first. We could have launched MOBU a year ago, but the market was not ready yet. We spent months on the legal issues and waiting for a country like Malta to disclose guidelines and legislation for ICOs. We made sure that we included other aspects in our offering that our competition hadn’t even thought of yet.
We would also like to ask you about how you see MOBU’s future. Do you expect financial institutions to undergo some kind of grand metamorphosis? More specifically, what structural changes do you expect to witness within the legal system as an otherworldly trend? Do you think that this would create new opportunities for the blockchain industry? While your expert opinion is unquestionable, we would also like to know what materials and sources you use to better understand the market. We think that our readers would be delighted to look through those, if you don’t mind sharing some of your materials with us.
Yes, I strongly believe that we will see a turnaround from the financial institutions as the blockchain industry has proven to have lucrative returns, and this is something investors will always chase. There are some good projects with actual blockchain use cases that solve significant problems. Unfortunately, the devil is in the detail as with any investment. Blockchain technology is made for information that needs to be exposed and cut out the middlemen; voting systems and audit trails are great examples of this. We work closely with a legal team in Malta that is part of the consulting team for their government to setup the legislation for ICOs. This gives us firsthand insights to ensuring compliance.
It looks like it’s finally time to exchange our goodbyes. We hope that you enjoyed this interview as much as we did, and we’d like to give you the chance here to talk about anything that we may have missed or that you think is worth mentioning. Also, could you provide some links for our readers so that they can check out any news or updates related to MOBU?
Thank you for the opportunity. In summary, we have a strong team, experienced advisors, actual blockchain use cases, solving real problems. We already have strong confirmed issuers on the platform and one of the largest crypto communities in the world. MOBU will be the company you either invest in now or tell your friends five years from now, “I should have invested in MOBU back then!”