Stable Coins using RegA+
CEO and Co-Founder
CEO and Co-Founder
Oscar is currently one of the Top 10 Global Thought Leaders in Equity Crowdfunding, a Top 5 Fintech Influencer, Top 10 Blockchain and a Top 50 InsureTech. He has published an eBook that has been downloaded in over 20 countries, and been distributed by partners worldwide. Oscar is a featured speaker on Fintech, regulated, equity crowdfunding, compliance, shareholder management, investor relations, and transparency in the USA, Australia, UK, Germany, France, Netherlands, Canada, Singapore, Indonesia and China. He speaks to audiences covering alternative finance, RegTech, insurance, banking, legal, and crowdfunding. Oscar also advises the world’s leading research, accounting, law firms and insurance companies on the impact Fintech, RegTech, LegalTech, InsurTech and OrgTech is having in their business.
Dr. Kiran Garimella
Chief Scientist & CTO
Dr. Kiran Garimella
Chief Scientist & CTO
Kiran Garimella, Ph.D., is the chief scientist and chief technology officer at KoreConX, leading the strategy and development of blockchain and machine learning solutions. A sought after speaker and author, Kiran has more than 25 years experience in information technology, consulting and financial services. Previously, Kiran held roles such as global CIO and chief architect at a General Electric company and vice president and chief evangelist for BPM at Software AG. He is also an advisor to the Alliance of Merger & Acquisition Advisors and the MidMarket Alliance, principal founder of iKnowCentral and co-founder of CognitiveWorld.com.
Experienced Founder with a proven history of working in the Fintech industry. Equity crowdfunding pioneer since 2012 with the passing of the JOBS Act. Industry knowledge of Reg CF, Reg A+, Reg D 506(c) from an issuer, platform, and promoter viewpoint. Reach out to Walter for equity crowdfunding issuer services, marketing, and consulting.
Oscar Jofre 00:00
I’m doing great. Oh, absolutely wonderful. Let’s see what the gentlemen. All right, it looks like we’ve got everything under control here. It is now exactly 1130 on the dock. So let’s get started. And once again, welcome everyone to the KoreSummit webinar series 2021. My name is Oscar Jofre, we’re really excited once again, to have another great topic that I think it’s pretty exciting. There’s never been this kind of discussion point brought up before. So today, I’m going to be joined by two individuals who are going to bring some eliminating component to the discussion. And of course, there is, obviously for everyone, our district, keep in mind that there is no PowerPoint presentations. This is really more of an educational component, there’ll be kind of a 15 minute q&a. And of course, all of this is live right now on YouTube. on our YouTube channel, where you can go to KoreSummit.io, you’re to view the recordings. So let’s get started list. First list, learn about our panelists, each one of them, let them introduce themselves shortly here, and then we’ll dive into the big topic of this morning’s conversation. So, Walter, please.
Walter Grieves 01:43
Good morning, Oscar. And thank you very much for including me on this very interesting subject matter. Very interesting. So my name is Walter Grieves. I work in a company called goal x. And we are a strategy and marketing firm focused on equity crowdfunding, we were born by necessity on we invest in and build our own companies that we seek to take through to exit. In the equity crowdfunding space, as we were doing this, we noticed that financial marketing and strategy were the most important components in a successful equity crowdfunding campaign. So we built the capacity to do this for our own companies. And, you know, we looked to provide this service to a certain number of select additional companies, which fit our standards. And, you know, we’re, we’re fortunate enough to work with corticon x. And, you know, we’ve been very thankful for the relationship and appreciate the opportunity to talk with you and Karen on this subject matter today.
Oscar Jofre 02:51
Great, great to have you on board. Walter, we’re gonna have a great discussion. Dr. Gotti mela, please. Hi,
Dr. Kiran Garimella 02:58
thank you. This is very exciting. For me, personally, my name is Kiran Garimella. And I’m the chief scientist and CTO for KoreConX. And this is a space that, you know, we’ve all been following for many, many years. So I come from a finance and technology background for many, many years. And you know, I’ve been with the large companies and an executed capacity as a CIO for formerly for General Electric, and so on. And, but this whole space about stable coins is absolute, so exciting. And also, we have a interesting viewpoint here, too. So love to engage with you all.
Oscar Jofre 03:35
Wow, I can’t believe you get that. So you took away the thunder you put up subject matter out there. We’re gonna talk about stable coins. But we’re gonna put a really interesting twist to the stable coin discussion. Because I, you know, when people hear that, typically, they only have one view of it. And what we’re about to bring up is very, very different from that. So looking forward to having this discussion with each of you. So but before we do, let’s, let’s bring everybody into the context of what is a stable coin, I’m going to, you know, put each of you in kind of the hot seat, what people everybody’s reading about stable coins right now. And then we’ll dive into the stable coin under RegA. So Kiran, why don’t you start us off with it? And then Walter, I’ll be coming back to you on that as well.
Dr. Kiran Garimella 04:26
Certainly, the traditional way that people have thought about stable coins, and when I say traditionally, I just mean last few years, you know, that is traditional in this fast moving space. People have thought about stable coins as thinking about Hey, cryptocurrencies, they’re so volatile, and what can we do to prevent that perhaps, right, and so to make that much more stable, and, you know, keep that. Now, unfortunately, the messaging and the way it’s been structured is can be slightly confusing. On the one hand, you know, Thought about the stable coin as removing all the volatility and reducing the volatility risk. And on the other hand, people are saying, Well, if it is stable, if it is rough, it doesn’t depreciate in value or the Where are the opportunities is trade on that. So we’ve seen a lot of the interesting ones come out there, and there are stable coins with no stability behind them or backing behind them, as we found out, you know, there is a significant deficit in the reserve that’s supposedly backing the stable coins. We have seen stable coins for all kinds of, you know, backed by gold as an example, I met one gentleman up in Chicago once, who wanted to put up gold as the backing for the stable coin. So you kind of wonder about what does it actually offer in terms of the value. And there have been very interesting twists to that one, especially with Libra and, you know, some of the companies like the tether, and companies like that. But I think, you know, that is sort of the general background of where the stable coins have been coming from and headed. But we have a very interesting, dynamic and very interesting way to present what we have here. So at least I will stop there and you know, give
Oscar Jofre 06:14
a good because I thought you were gonna derail me again. And I, you know, I go Wait a minute, I thought the first let’s educate people on our knowledge. Walter, obviously, you’ve had some exposure to this, you and your team have dreamed up different components of the watching the blockchain space and stable coins. Love to hear your your take on stable coins as it sits today, before we dive into our topic. Yeah.
Walter Grieves 06:42
Absolutely. And I guess I’ve learned so much from Dr. Garimella. And you Oscar, in expanding my thinking around stable coins, and also simplifying stable coins. You know, I think that, for me, it’s as simple as thinking about a share. And I’m a stock guy. That’s kind of my background. So I kind of think in those terms. So for me understanding that, you know, this was just a share of a an entity that was issued on the blockchain. And then with that issuance, and with it being on the blockchain, all of the advantages of you know, quote, unquote, crypto come into play. You know, we always steered away from the unregistered securities, the crypto side, just because we were concerned about long term tax liabilities and some of the projects that we had. So we literally waited seven years until, you know, KoreCOnX. And the SEC caught up with the, with the needs that we had. So, so I started with this, you know, so to share it to share on a blockchain. And then it’s a share on a blockchain with particular advantages a use, on this case, if it becomes a cash backed asset issued under a reg a, and it can be tethered to a underlying currency, it now has become a real digital currency, don’t think we’re backing something with a value. And then the next step is usability. And so usability comes when that share or that ask that piece of an asset can be utilized in a community in a network of individuals. And you know, so those are kind of the the things that that we were looking at, and really the Oscar Dr. Garimella helped us out. And you know, we’ll get into a little bit later, I’m sure the Oscar has some more. But that’s kind of just just a real simple way that that my small dinosaurs bite sized brain had to understand in order to make this work, it gets too amorphous sometimes in the conversation around white papers and blockchain in reality, I think it’s relatively simple from a function standpoint.
Oscar Jofre 08:53
Yeah, I mean, the goal was here right now, just, you know, the whole thing is Dr. Kiran alluded to, there’s a lot of discussion on stable coin is backed by something. But there’s something that constantly comes at me, you know, I’m not old school or anything like that. I get it if people are finding different creative models and all that. But you know, when you put the word coin at the end of anything, in my word, it’s a currency. My question is really, it’s really simple. And I often ask is, what is its purpose? And how can it be used? And today, the only usability is to train and well, that’s not usability. And I, look I’m not, I think what has started is fantastic. Now, like everything else, the same way that always new innovative, what we’re about to have this discussion today is also new and innovative, because we’re, we’re taking that same concept of tech terminology, and we’re turning it on its heels and saying, Well, wait a minute. Why can’t Not Why can we not have a stable coin that can function, you know, backed by something, so people can trust it and have a functionality as well. And, and I say and be able to trade. I mean, those are pretty exciting things. And it’s interesting, you know, that we needed all of it. It’s like anything else it was right there for the taking. So obviously those who are listening right now, they’re probably one scratching the head, like, what are these guys talking about? So we’re gonna dive into the discussion for today. How to create stable coins, utilizing Regulation A plus, I, you want to wait a minute, stable coin is a currency. regulation is a regulation, it’s a security, yes. But there is something that we believe that a lot of people have overlooked is that stable coins still have a regulatory kind of fogginess on the side that you never know when the regulators may or may not pull the plug? This uncertainty about taxes as Walter a alluded to, so you know, now we’re talking about RegA, and RegA as a security. So we’re not going to go into the full regulation, but we’re going to talk about how to use it and where to its purpose. So we’re going to start with with that discussion, you know, grand unite, and what we’re all having this discussion right now, because this is a new model of that a company can use it and utilize it for their business, too. I know you’re what you’re thinking raising capital, but you need to think a little bit bigger than that, in order to understand how this could impact. So let’s start with the framework. First grant, let’s start with the framework of using RegA for the stable coin. And then Walter, you and I will hop into, okay, now you’ve got it. How does it work? Right? How does it work in the mall. So Graham,
Dr. Kiran Garimella 12:15
the one of the most interesting aspects, you know, RegA as many people know, and we just want to reiterate, it is really to democratize capital and capital raising and allow participation by a lot of the retail investors. And so we have this whole framework about RegA. And you know, Oscar, I’m sure we can talk about the limits on that, and all the intricacies of RegA, and RegA plus, but the wonderful thing about RegA plus is that it is a, it’s a great security for the retail investors in the private capital markets. And there is going to be and there is already ways that we are looking at now, where there’s going to be trading capability and a tremendous amount of liquidity being built up by various types of mechanisms against a RegA. So under the background, the one of the wonderful things about the RegA is that it’s a fully regulated instrument, and it is protected by all types of compliance activities and broker dealers, you know, behind standing behind that sec, filings and so on. So this whole risk about cryptocurrencies and how they arise, and you know, what exactly is being backed? And who is behind all of that stuff, that uncertainty is going to go away, right, and then you still have the RegA. Now, the challenge, of course, is that RegA is deemed to be a pure security, but then what are its usages right, of course, is investment, there is investment potential within that, and there is trading potential within that. But if you take that framework like that, and say, Now, how can we marry that with the whole concept of stable coins and the usage and the utility value of that? I mean, that’s where I think things really get interesting.
Oscar Jofre 14:09
So the Okay, so what we’re, you know, we’ve obviously gone through these discussions, there’s already been a filing. So in full disclosure for everyone here, there is the following. This is no longer a hypothetical. This is an actual, so it’s been modeled on our environment, there is a chain involved, that that has been built on. And, and more importantly, it’s for its full functionality components. So what we’re really saying here, if you if you really listen carefully, is that there is a regulation that’s been presented at us. So this is the important part for me. So I’m just going to recap from technology and I’ll come back to you, Walter is that here’s a regulation that allows you to raise up to $75 million, fully compliant with the SEC you’ll be qualified, which you could make into us Stable coin, and to allow it to have movement within. I’m going to use the word mall. And I’m going to go into you, Walter into this one, because we’ve had many discussions. We’ll talk about the backing of it as an expert, but let’s talk about the mechanics of the mall. So the mall is I have now, you know, it’s like, when you own a share in a company, you got it? You can? Can you go around to a mall and you Hey, listen, I own 10 shares of this company, will you buy them? It’s a little different. But when you got a coin, let’s call it the hidden coin just for now for for this discussion only, but we got the hint coin, the hidden coins in the small, how does that all play out and what is needed in order to make sure that that that currency has a play, and, and with all the constituents involved in it?
Walter Grieves 15:56
Yeah, I appreciate you using the word [uncertain]. Oscar, it helped me get my brain around this, I’ll take a step back to start on. You know, as we look at equity crowdfunding, the companies that are most successful, they have a user base there, there could be a bar with a bunch of patrons that tequila company, they could be an online network. But a lot of the successful companies don’t have fans, they have a bunch of customers, preferably 10s of 1000s, hundreds of 1000s. And those people become investors, they become partners in a project that they love, and that the best kind of investor you can have. Because they’re fans, they’re not like a VC who is you know, looking over your shoulder and trying to maximize their interest in your company, the fans just want to see you be successful. So I think that’s one exciting component of this. Now, what we’re talking about here is having these fans buy shares of your offering that are offered under reg, you know, see reg D, right a in this case, we’re talking about RegA. So those shares are stored on the blockchain with a company like cork onyx that has, you know, a revolutionary transfer agent, that’s, that’s moving so far ahead of what was standard paper. And then you now have these these shares on the blockchain as a step further, like we talked about, if you if you identify a portion of those that are going to be issued, and their cash or cash equivalent back, and they are pegged to a currency, you now have created a digital currency under RegA. Now, what’s the use of it? And that’s a great question. I mean, to me, scarcity is a value of commodities not not a company. So I think you make the argue that Bitcoin aetherium they have their their kind of behave more like commodities now than actually a bad company traditionally, um, and you know, we could talk all day long, like, Look, I love bubbles, I love chasing bubbles, it’s great fun. But at the end of the day, it comes down to some usability. Now, now, those crypto those cryptocurrencies, and my terminology may not be 100% correct. So forgive me. They have usability that’s developing. But there’s a lot of challenges around it, they have to be converted into cash, they have to go through brokerages, they’re unregistered, it’s difficult with taxes. So there’s some challenges that that change when you fall under reg a. Um, so if you have this, you have a restaurant, and you’ve issued coins, or I’m sorry, digital securities that behaved like a currency, like we’re talking about stable coins, and issued those to your patrons, your patrons could use those coins in your, in your restaurant, the stable coins in your restaurant to pay for things. And theoretically, if you had some other people on your network that were inside the KoreConX, stable coin transfer agent network, those other people could paper as well, maybe you have a vendor, maybe the guy that’s bringing pickles in is on your network. And he’s willing to take the stable coins, which are cash equivalent, and which are transferable directly into cash, without the immediate intermediary. And beyond that, you know, you issued these you issued these coins. So you’re the bank. And there’s a merchant processing capacity to these coins, and thus the opportunity to behave as the bank and and charge some sort of a user fee reasonable user fee for doing this. So it starts out very simply, it’s just a share. It’s like a piece of paper. And this term, it’s on the blockchain. And this term, you know, it’s been registered, backed by cash. And it has been and it has been a you know, peg your currency. I mean, look, like currencies aren’t supposed to be volatile, right? So we have this weird thing where we have these digital currencies, and the value of the volatility is insane, you know, and imagine If it was the underlying currency of a country, how difficult that would be to transact on a daily basis. So I think you’ve got tether, which Dr. Graham only brought up. And obviously, that’s a little bit more stable pegged to the dollar, you can see it behave. It’s used in interesting ways. But you know, that’s kind of how we see this function, and it comes out with the community, you have to have a good community in the beginning, first off, I think, to have a successful equity crowdfunding campaign that helps a whole lot. And secondary, if you’re going to issue the stable coin, someone has to spend it on something, it can’t just be a promoted asset class that people chase in trade. It really in the long run, it has to have some sort of use and some sort of adaptation by a group of people in order to be successful.
Oscar Jofre 20:43
Yeah, you know, um, for for some of us, I mean, in particular, for myself, I remember, I call it the mall, because if any of you ever heard of West Edmonton Mall, or the great, the American Great American mall, imagine the malls, you know, they are, they’re all trying to learn more about their their patrons coming into the store. And so what do they introduce the gift card? Well, why buy a gift card, if I read on my credit card, there’s no value in that. And so, in this scenario, it’s a little bit more than you become you started touching in there, Walter, which is you become the merchant. That’s right, you become Visa, MasterCard, but it’s now a coin, that you now bring under your umbrella, you create a merchant services on the side, that will charge the fee, you’ll be competitive, of course, to everything else. But more importantly, you are in control of that mall environment. And then what you want to do is encourage the movement of that coin. And the beauty why this is so exciting, is that because regulation aid allows anybody over the age of 18, to move it. Therefore, unlike other stable coins, where there’s always somewhat of an uncertainty, or like anything else, everybody wants to get in, but they’re not sure there is surety here from every aspect, because one qualified by the SEC to it was sold under the securities. And it moves within parties. Always following underneath it all the securities element to the individual is like paying by cash or debit or Visa, MasterCard, and you as the operator of the coin, you want to encourage the movement, you want to have more people in the mall. So I like the one Walter brought a you want a restaurant, you buy pickles, and you buy pop, you buy supplies? Well, the goal is to encourage all the merchants in that ecosystem, to understand that if they accept the hand coin, they will be able to have the comfort of knowing that it’s been back to $1. So it’s, it’s no different than accepting $1, you know, from US dollar, or anything like that. But now, when each time that transaction occurs, the merchant services is collecting their fee. So this is something that is been very interesting through all this is that their the way the stable coin works is that it doesn’t immediately bring in the cash to the company, other than the fixed one time use rate. And so we’re going to cover that, but it’s exciting. So you’ve got a security that we now call a stable coin, a stable coin, that now you already sold it to crowd, you can now forget, you know, enhance the crowd build a mall. And if you don’t know how to build a mall, there are companies out coming out to teach you how to create a mall. And we’re calling it the mall. You can call it a marketplace where you bring everyone together to make sure that that currency moves around with trust and all that in your the merchant services in the middle. Just think of what Visa and MasterCard and E debit all did. That’s what they did. So to make that happen, obviously Korean, it comes down to the processes that in from a technology perspective when just dive in a little bit of that, and we’re going to get back into more the the high level element of of the user experience.
Dr. Kiran Garimella 24:21
Oh, absolutely. And, but I can’t help sharing with everyone the analogy and the image that popped in my mind when Walt was talking. And the image that popped in my mind is that of you know, having a Ferrari in your driveway. You look at this and you might use a Ferrari to drive it 30 miles an hour to go to the grocery store to pick up a check of milk. Okay, but is that the best use of the wayfarer? I mean, he said we’re all the real, you know, possess is for the Ferrari, right. So what we’re seeing now is an instrument that has all the potential of some really aesthetic things that, you know, I’m going to cover this as we kind of go forward, you know, the whole, you know, the NASCAR, the racing and all that wonderful stuff that you can use really for Ferrari, you have exciting times. So that’s kind of where I think we want the stablecoin to be. And it has a potential and we’re saying that, but to Oscars point, there is a method of how we actually create a stable coin. And there’s a whole technology process behind that one, right. So there are various pieces of technology that are used to define and create, manage and use the stable coin. So if you look at the entire process flow of how this happens, we basically have the people who own the stable coins, the people who put it out there, the merchants, the retailers, the outlets, where this can be used the mall, the stores in the mall, so to speak, the virtual stores in the virtual mall, right. And all of that happens. And then there are the processors behind all these the guarantors the stability guarantors, right, and that is the security handling of this as a security to make sure everything is compliant. So all of this is, you know, predicated on having the right technologies such as you know, the blockchain is a permission blockchains, the compliance portions of that the management redemptions and transfers of the coins. So all of this, there is a process for doing that. On one hand, you’re creating the usual RegA securities, and then you’re pegging that with a stable coin, all of that, of course, created with smart contracts to make sure all of this is, you know, pretty stable, so to speak, from a technology perspective. And, again, we can go into a lot of detail on this one, but you know, I just want to at least give the overview of how that process might work. And here’s the other interesting part. On the retail side, you know, it can be a mobile app that people can use. And all of that is actually connected with the compliance architecture of a reg a security regulation. So this transactions can happen like a credit card at the point of sale, so to speak. But with all of the backing and the compliance behind it, that will make sure that you know, this is not misspent in any way. A lot of other things to talk about. But I want to stop there because I can go on for hours on this one.
Oscar Jofre 27:22
Yeah, no, it’s an important aspect of it, because people are going for security, if you know, doing any type of transfers. And all that is very difficult, it actually isn’t a, if you got everybody under the same infrastructure to the user, it’s got to be simple. It’s as simple as I bought some coins, I want to use them, or I want to trade them, you know, we’ve we’ve only we’ve been talking about the usage part, which is an important element of it. Because from a user perspective, there’s nothing worse than having something and then waiting for it to go up and down. But here, I got something that’s worth $1, I’m going to go to the merchants that are in this mall. So when the company provides this coin, to their, their community has two functions, it can either work in their mall, and there’s something that Walter brought up that really lit up his lights a few few times when we discuss. So remember, underneath it is a RegA offering. So we got a hint coin. And now we got the core coin. And this is where it gets really cool here, where you can now have interchangeable coins, between two holders indicated I need some core coins to go to that, because that’s what they take. Or we can even get the merchants to cross reference to accept the coins. And then what we’re really doing is transferring of securities between holders. But again, it’s all smoothed out. But you know, I cannot stress the importance of the creation of the mall. Everybody’s probably jumping up and down. I’m gonna do a $75 million stable coin offering. It sounds easy to do to file. There are costs associated, of course, but the real key Walter and I’ve been talking a lot about this. There is the point of you got to give assurances. So I’m a merchant. Walter, I love the game coin. I think it’s great. I, how do I know it’s worth $1? What is my like? What’s my assurance that is worth $1. And this is where the real key to this is that when you’re raising this capital, it needs to go into this pool. It could be a bond, it could be real estate or it needs to be something liquid that if people need to cash out, you need to pay out, right? Obviously, it’ll pay out with one less your fees, of course, because the merchant will always make the the capital in this and then you can reissue more coins. So let’s talk about that a little bit. The B bit The merchants are the ones are going to need to trust, we know the buyers are going to buy it. That’s, that’s easy. I think that’s the easy part. But I don’t think that’s going to be too challenging if the company’s got a good brand recognition, but the real key is getting the merchants to buy. And for them, it’s all about stability, I want to get paid. But at the same time from a merchant services, you want to keep encouraging them to keep using it. But the only way you can do that is by getting one merchant to the other merchant to the other. And then of course, there’s stability or back in it. And we’ve been talking about different backings, and your expertise in this area is quite, so I’d love to hear your comments on that.
Walter Grieves 30:37
Yeah, thank you, Oscar, you brought up a lot of good points, um, I always try to steer a hang up. So I always try to start a call coming, I always try to steer back to, to what is most simple, and that’s just kind of how my brain has to get around things you don’t have I’m fortunate that people much smarter than me, around me. And you know, the conversation about the h i n coin that Oscar brings up is from a company called hot import nights on with a gentleman named Mike Lee R. And we’ve worked together not a company for a long time. And you know, seven years ago, we came up with with a model. For Sorry, I came up with a model for, for creating exactly this type of a thing, it would be some sort of a digital currency that could be used in a network of people. And this case, it’s a combination of live events. It’s a combination of vendors. And then there’s online platforms as well. I mean, ideas like how do you create a digital currency that can be used amongst amongst that group. And so Originally, we thought of it like Think of it like miles, you know, you use a credit card for your airline, your airlines giving you points and giving you a currency that you could use. And that was what kind of the first manifestation that we saw with this was that so our brains were thinking about it. And that’s what we’re working on with Oscar. And so you’re motivated to use your card because you get a benefit from it. And there’s a network of people, and then there’s a group of vendors that will accept those miles, it might be a hotel, it might be for an airplane ticket, and might be for a beer, you know, and you know, that mile, evidently, there’s a transaction with the liquor company that’s supplying it, there’s a transaction on the back end there. So that’s kind of like how my, my brain has to think about things to make it tangible. Now from from this element on moving forward. So if you’ve created this stable coin, and you have a network of customers, and then a network of vendors, you can incentivize people to use your stable coin instead of $1. You know, if you say, hey, look, I’m going to give you this service, this product is $1. If you use a stable coin, it’s 95 cents, and we give you five cents of incentive on it. And you’re able to do that because of margins. And then when your vendors, it’s the same thing, hey, if you want to come in and use the stable coin, I’ll offer you a discount. It’s an incentive for your customers. So that’s how people aren’t we love coupons. We love free stuff. And you know, in this country, you like getting deals. So that’s part of the the psychology of the network that you have to build is coming in and building this community, and then incentivize the community. And Oscar brings up a really good point. Like I said, I love bubbles, I love hyper inflated assets. I think they’re amazing, you know, I spent time on a trading desk. But at the end of the day, it comes down to functionality and usage, like Dr. [uncertain] say, um, you know, it’s like a Ferrari and you’re only using the trading element, you’re using the the hyper upside of the digital currency. It’s not being used in a community I here’s the other piece. Yeah, you can use Bitcoin. Now, throughout the set, you can use Bitcoin now through another person. And in exchange, there’s two or three people that have their hands on that transaction, including visa, when you’ve issued your own stable coin, and it’s registered, and it’s backed your visa at the end of the day. So of course, we send all this guys love Bitcoin, because they’re getting a piece of the action. And this instance, the way that I see it, and we’re modeling it, you end up becoming like visa and the merchant processor is taking your payment directly is a Visa, MasterCard or a hinge coin. And that’s what’s exciting for us. And that’s really why we waited, we were so excited by the potential of an SEC registered cash equivalent backed digital currency being used in a community the way it was meant to be. We always knew the SEC would catch up at some point. And that’s what we’re seeing now. You know, when companies like KoreConX are on the edge of this, what some other great service providers really pushing the potential of this from a technology standpoint, you know, we’ve been a little bit waiting seven years to have this conversation. We were laughing my partner, Russ Herbert is my other partner, our CTO, who you know who works with with Dr. Garimella and Oscar. They’re just so much smarter than I am. But we’re just laughing because we’ve all been waiting forever for this to come. Because we knew there were limitations with the Unreal registered security at the end of the day, digital currencies that are unregistered will always be unregistered. And sure you can get a middleman to take them, I treat them like a commodity, it’s no different than buying with gold, you can buy with gold, or Bitcoin you got to go to be said they got to convert it. What we’re excited about is this next level, it’s fully registered fully transparent. Every share, every coin is registered. The IRS loves that the SEC loves that. And I like three letter agencies happy with me personally, you know, so? And that’s kind of the excitement around this and the community of where we see it going. And yeah, obviously, it’s so exciting. You know, we were waiting so long for that still.
Dr. Kiran Garimella 35:39
Yeah, Walter, I think you said you said it best. But you said you said it so quickly, I’m not sure people caught it, just want to double click on something you just said, you know, it’s an SEC registered, fully compliant digital currency. Right. And I want to dig, I want to unwrap that a little bit and talk about the reason we have crypto currencies, is because there is a perceived amount of different types of stability risks, for example, or inflation risk, or away from compliance being able to so currencies generally, whether they are Fiat, or crypto or bearer instruments, right, anybody can take that. And, you know, they don’t come with any, you know, backing it is just it is there, you just use it and you’re done. securities are based non. They are bearer instruments, right? So, I’m uncertain on bearer instruments. In other words, you know, you can pick up somebody else’s securities and trade them freely, unfortunately, because it’s what they are, the convenience of currencies is not present in securities, in stable coin, and to drive home just what you said, Walter, we’re marrying the two, we’re bringing in place, all of the the the convenience of being able to use it in various outlets so easily just as if you just change $1, or a credit card, but with all the protections, all of the banking of securities, right? I mean, that I think is is very powerful. So I just wanted to share that.
Oscar Jofre 37:15
It You know, this discussion, it is it, we clearly need more hours, so but I’m going to some, I want to give everybody an understanding. So first of all, we I know everything you read about stable coins is backed by something gold and all that. In this case, when you’re raising the capital, you’re going to become the backer, you can use that capital to put it in a bond. And we’re looking at other models, Walter steam is thinking some really creative, you need to have a finance background to come up with this. But the beauty of this is that you are then creating another entity that becomes a merchant services. So you become Visa, MasterCard of your own world. I mean, this is a friggin pretty exciting. And then of course, you got your audience that is incentivized to buy your securities, which is now a coin, and can now move around that marketplace more in every single time somebody uses it, you get paid in a coin. So I’m going to give you the mouth, you’ve issued 100 million coins. And every single time you get 5%, so you keep 5% of the 100 million coins. That’s what you already made in the very first time they use it as a merchant services. Every single time it gets used again, you make another 5%. And eventually, we’re going to end up happening is yes, there will be some people that are cashing in. But you’re always going to there’s a model where you end up making more and you can give out a dividend as well in the form of a coin to the ecosystem. So this is going to be a very interesting model. And there as Dr. grande keeps alluding to, it’s like you want a Ferrari, you’re only using bits of it. There is secondary market trading for the stablecoin as well. So it is a RegA therefore there is a marketplace. A true FINRA registered secondary market to trade this particular security or stable coin, under the regulation to everyday investors fully compliant. So you can buy it, you can use it and you can sell it or you can train it. It is it changes the fundamentals. And in particular, when you think about where you can be disruptive, there are many different areas where you may see this as a disruption is it’s beyond points. For me. This is way beyond point. This is the point on steroids, like a point is sort of like driving a Ford Pinto for those of you Remember a Ford Pinto. And now we’re giving you a Ferrari to go with and, and the key is the, the important thing is now and we’re gonna see models like this for very interesting markets like cannabis. And people go, Well, why is that? Why is that? Well, to most of you may not know this, but cannabis is, there’s a big problem where the merchants can’t use Visa, MasterCard, so they need a way for Walter to pay for the goods, and they need something that’s stable, right, that stability of having that currency. If you own real estate, you know, you want them all, you are almost the most the ideal candidate for these scenarios, or as Walter alluded to hot import nights, which has a large community of not just stakeholders to, to, to, to attend the event, but they also have relationship with vendors who up until now had no visibility into that. So there, you’ve got to look at all the different upsides component, you become a merchant service provider. So you become alongside Visa, MasterCard, your it’s your coin, Visa, MasterCard, right, and you obviously will offer the better rate, you want to encourage that. But not only that, you actually get to know more about your community than you did before. You get to know where what’s happening within it. So you can actually anticipate how to work with it. And the nice thing about RegA is that one year, you can go out and raise 75 million, the next year, you can go back and raise another 75 and another 75 and 75. And it’s amazing kind of attribute that it’s been enhancing to this regulation. So, um, so I’m going to post each of, you know, I’m going to play devil’s advocate on the other side, which is, obviously anybody who’s listening in on this conversation is thinking, but wait a minute, there’s a, how’s this thing gonna work? It’s flawed somewhere here about the money flow? Because how can a merchant make money in this model? And so I’m gonna go to you first grant, and then I’ll go into the water fleet,
Dr. Kiran Garimella 42:18
making money and disseminate our various ways, you know, that we can think about this one? Now, obviously, the one you thought, you know, you’re thinking about is how, how can I, you know, obviously, there’s going to be a fee, there’s going to be a commission, there’s going to be, you know, some percentage of that, and there’s going to be some part of revenue share going back with the provider of the coin with the merchants and so on, obviously, right? There are many other ways that people have not thought about this one, where you could be providing all kinds of among them, the provider or the merchant, vice versa, can be providing various types of incentives to each other through contracts that are based on the stablecoin saying that, you know, hey, for example, right? You know, I, this is a client, let’s assume on motorcycles, it’s a motorcycle fan club, you know, the Harley Davidson, let’s think about that as an example. So there are venues out there events where people want to go and meet each other and have, you know, racing parties or whatever they want to do. And there can be so much incentives that people can trade among each other. So people say, if you come to my event, and get your fan club to participate in my Harley event, you know, here’s the discount that I can give you. And that discount is applied to a smart contract through to the other merchants, and vice versa, there can be a lot of these exchange flow exchanges that can be going on. But having said that, you might say, well, we can do the same thing with even just regular, you know, currencies still right? Here is the difference. Number one, you are branding and rebranding for a particular community, there is a pride within that, right. So that’s one big thing. The other thing that people you know, don’t realize, and this gets me very excited, because I’m an I’m a machine learning data analytics kind of background, right? That’s what it every time there’s data analysis to be done. My, I’m just ecstatic about it. So every time a stable coin is used, one of the wonderful things that comes with a stable coin as both from one hand to the other from one account to the other, is the history of the transactions and the behaviors behind that. Right. And there are many, many ways that each of these merchants, each of the participants can leverage that data analytic capability. That’s really exciting. So I just want to stop there because again, I can go on for hours on this piece too. But see if you guys had you know, some comment or something on that.
Oscar Jofre 44:47
Well, I think what’s gonna happen here, this is the early stage once we we get through and start putting them out there. People will start getting the idea, Walter coming back to you. Obviously, this has been something that you and your team Waiting for a long time. Obviously, I remember when our first discussion yet 1000s. And one question is What? You know, how does it get back? That’s a very good question. Let’s just talk a little bit about that. How does he get back? I mean, this is one, this, remember that the money is being raised and to back it, and that’s the back end of it. And but what instruments company could potentially use? And we’re still in the early stages, of course. Yep.
Walter Grieves 45:24
Yeah, absolutely. I think this is a fascinating subject matter. You know, derivatives are such a big part of the of the world out there, I think there’s something like $240 trillion of debt derivative instruments around the world issued against a much smaller underlying, actually set a set of net assets, hard assets. So I think what’s very interesting is figuring out how these coins will be backed, how they’ll be securitized, and what type of leverage can be generated off of these, these are fully registered fully sec registered. I mean, the RegA is the same as it as one, except you don’t have to defend the bid and trade afterwards. That’s what’s so exciting about it, all your shares are fully registered with the SEC, with all the advantages that springs and you know, talking about the secondary market, you know, that’s why you see your Airbnb, ease of the world and other companies, you know what people want to get some liquidity, they’re able to trade on the secondary market, because there is registration around these, registering your shares under RegA. And moving down this road even further, creates an even more liquid, a digital security that can be traded on an HTS. So that’s really what’s coming. And it’s coming very quickly, what we’re trying to figure out with, you know, this is this is going to be partly from the SEC, and partly from us, I think, being creative together as a community. How can you back these Sure, cash is an obvious one. But there’s other securities out there that are equivalent to cash, you know, called cash equivalent, you know, assets. And so, you know, what does that look like, you know, is it t bills, str notes? Like, how does that how does that work? And what does that? What does that, you know, what are the implications for the, you know, the amount of leverage you can get. And then the secondary thing is, with these digital securities, you know, what type of secondary derivative instrument can be created against those, that those that they guarantee. So that’s, you know, that’s kind of what Oscar’s alluded to as a final frontier, you know, we spend a lot of time out and in fantasy land, thinking about what could happen and what’s going to happen. And I think that’s part of what this is, is getting ahead of where the ball is going to be. And so I think these are fun conversations to have. And there’s a lot of answers out there. Cuz there’s, there’s a ton of precedents, you know, and we talked a little bit about about cannabis for me, I’ve worked in the gray market industries such as that, and the issue you have is the people that are willing to push the boundary the furthest when, so the people that are willing to push the laws, push the mining laws, push the laws around on, I don’t want to use the word money laundering, but how they bring their Bitcoin back in are the ones that are winning, but it’s but it but it’s, it could be a short term thing, it’s problematic. For us, that’s challenging, because we try to work as regulated as possible. That’s why I love the idea of the full regulation. If I’m fully registered with the SEC, of all my shares, all my stable coins are registered, every transaction is out there, then the people that are winning are the people that are the most registered the most innovative. And over time, that’s important in this business. And that’s what we really like about this. So with all this sec registration, and opportunities, another thing happens. Now, pension funds, mutual funds, retirement funds, grandmothers, you know, you know, young investors can all invest in the security directly through a broker dealer that’s qualifying for it. And that’s exciting too, because at the end, that’s like, what do we all want, we all want liquidity. liquidity is the most important thing that you can have in a security and a stock in any type of digital security on top of that. So that’s what we’re really most excited about is staying on the 100% transparent 100% registered side, because I think it’s us a lot of us come from a wall street background. A lot of us come from investing backgrounds, entrepreneurs, and you know, I think that we all really appreciate that the opportunity to operate in a very regulated environment. And it’s something that’s counter to look I love the I love the idea of Bitcoin. I think it’s the most amazing thing in the world. I love cryptocurrency. I love the freedom they bring, but we live in a world of three letter agencies and taxes and IRS and and you know that that’s probably what they’re going to be. I mean, we can get in this conversation. It’s philosophical, but the way we see it, the more registered you are The better of the asset classes and the registration of your digital security, the greater the adoption, and the greater the usage there will be.
Oscar Jofre 50:09
No, I agree. And today, we’re just getting the discussion started. I mean, this is the very first time we’re bringing this topic in the airwaves for people to start thinking about it. In other words, we could be your partner, you’ll see that our, our infrastructure using our gene has been cited in a in a document with the SEC. So there is a mechanism, but it’s not just that part. It’s all there. You know, people can say, Oh, I can do that. And, yes, you can. But there are other elements to all of this. And that’s the exciting component to it. So we’re getting to the part where we reach out to you now you are listening to us having this amazing conversation, we may not have all the answers, but put up your hand, click the button right below there, raise hand clean, just like that. See the pretty hand like that. And we will do our best to answer your questions here. All right, rolling, we’re bringing you in.
Hi, guys, I just want to I understand the incentive for the user of the coin, that there’s a 5% rebate, if you like. But going back a step if I invest $1,000 into the the RegA Plus, I get, you know, digital assets or shares. But then if I spend that $1,000 in the community, what do I then have? Have? Is that then gone? Once I’ve spent it, or do I still have some shares? Because I can’t sort of figure out what’s my incentive to buy the $1,000 worth of shares in this RegA Plus, if I just get a 5% rebate?
Oscar Jofre 51:56
Great question are really good one. So the the one thing that the the stable coin under RegA brings is that we talked about them all you need to have a community. So we’re going to talk about hot import nights as an example, they have a community already of followers, hundreds of 1000s of them that come to these events. So the incentive is that if they buy the coin, they’re getting it at a discount. So if the ticket was normally $300, to come to a weekend, sorry, $500 for a weekend event, now they’re going to discount it, if you use your hand coin. So they The idea is to encourage the first buyer by incentivizing them by obviously, another way, they’re not really buying shares, you’re not selling to them shares, you could do an offering where if you do 75 million, you raise 50 million for the coin and 25 million in equity where they hold the equity. Or you can do one, you know, you buy $1,000, you get one for one, you get one coin in one share the share scales, that’s where they gain the value of that return. And all that from an equity stake a coin is just a coin, it’s going to move there, they’re getting it to use it in the mall, the mall, when you’re when you’re presenting this to to the potential buyers of the coin, they’re gonna say the reason I’m buying this coin is because Walter, I love the hot import nights more, I love it, I can use it without merchant abcdefg. So you’ve given me a reason to use it. And the incentive is going to be, you’ve got a discount already, because you’re going to be attending the event. So you’re Radiohead? Already, and there’s not going to be any fees associated with it. So there’s not going to be an upside from from a share value. Because if you get 1000, you’re used $1,000. There’s no different than you get a paycheck of $1,000. And but the reason why you bought these coins is because it’s giving you entrance into the mall. That’s really the key behind all of this. Richard, we’re bringing you on. Thank you. Could this coin facilitate t plus zero trading? In a financial ball, for example? Correct.
Dr. Kiran Garimella 54:15
Oh, sorry. Yeah, no, absolutely. And this is why I was highlighting the fact that the convenience of using this as a currency is now married with the advantages of having secondary trading t plus zero trading in the on the security side as well. Right. It’s a it’s a marriage of both.
Oscar Jofre 54:38
Silvia you have a question. You’re on mute. If you unmute yourself there. Okay, I think hopefully she’ll she’ll get her microphone going. Listen, this is we’re this I’m sure all of you have 1100 And we do have a model on, it may not answer everyone’s question. But the idea is to Walters point look at that they’ve been looking for it for seven years. And it’s finally here. See, it’s it’s a journey that takes a little bit of time, but it is exciting. I mean, think about it, you got to really look at it in a very different point of view, the way I look at it is, I can tell people, it’s a stable coin, and you can use it, there is no other. There’s no other cryptocurrency in the map right now, that obviously inroads are being made, that it’s going to happen. And there is something really interesting about this particular stable coin, unlike any other, the user doesn’t have to pay any fees. There is no gas fees associated, there is not there, there. We don’t call it a wallet, but it’s going to be an app, but there’s none of that is going to be associated with it, they’re getting $100 worth, they get $100 worth, they don’t have to pay some minor demand to to make the process so we understand the friction of money. And they’re in order in order for this to work. It just needs to be fluid. And but anybody coming into this, the first starting point, as you all know, when we talk to you regarding your RegA, and you want to do a stable coin, we need you to speak to an expert who can help you build a marketplace or a mall. Because without the marketplace or the mall. Rolling, you had a really good question, why would anybody buy my coin? You’re right. Why would anybody just because you’re saying you got a coin, I’d rather buy your shares rolling because at least this way, you know, when your mobile your application is up, it’s going. But it’s it when you have a mall already, or you’ve created want to work in towards one that he really brings out this opportunity. So I’m Silvia, were you able to unmute yourself, it doesn’t look like she’s been able to do so. If there’s any other questions out there in the No, we’re easy to find. Walter. Obviously, he’s coming in at it with a really interesting perspective. Dr. grande and myself, we’ve been knee deep in it, creating documentation around this, obviously looking forward to speak to to many of you about it and look like Silvia may be ready now. So
yes, I get the job. Done. I’m way ahead of myself. Good afternoon. From New York, I was forwarded this zoning to attend and wanting to know some information, some basics about the Bitcoin. Is this just another version that’s being created? And is there a way to invest? Or how, how is it to get involved? I’m sorry, I was multitasking. I don’t know all of this was discussed on the zoom or this webinar replay will be sent to us. Is that possible as well?
Oscar Jofre 58:02
So I’ll answer the first part. Yes, the webinar is available on YouTube, on [uncertain] on the KoreConX channel. It’s also available on the KoreSummit.io website or all being recorded. And I’m going to let Dr. Kiran answer the question about the equivalent to Bitcoin and all that.
Dr. Kiran Garimella 58:20
Well, let’s see, how shall I say this? comparing a stable coin in the way we are describing this is as different as you know, Bitcoin as Monet’s to moonshine, right? There’s absolutely no comparison. Bitcoin is not back, it is not stable, there is no regulation behind it. And you don’t know what’s going to happen with it. Right? It can go to 100,000, it can go down to zero, we never know, right. And it’s only usages and being able to exchange it between two different parties. And that’s it. On the other hand, is stable coin. It’s regulated. And no people have this philosophical issue about, you know, hate regulated, I don’t want regulation but take the positive side of regulation, its protection and its stability. It’s you know, it’s all of those protections that you get from that. It’s all of that plus there is a usage value, there is a branding behind its usage value behind it, and a lot of other benefits securities related benefits and the convenience of cryptocurrencies attached to that one. So, it this is a complex topic, and many people are still trying to get wrap their heads around it. Happy to have more discussions on this front, but it’s very, very different.
Oscar Jofre 59:34
Thank you cram. So I’m closing remarks. Obviously, Walter, love to hear your closing moments on on on this subject, and then grant and then obviously, we are going to move on to the next KoreSummit webinar, please.
Walter Grieves 59:48
Yeah, you know, thank you, Oscar and Dr. Garimella for including me in this conversation. All my opinions are just that they’re my opinions. They’re based on a lot of thought and and a lot of You know, a lot of research but some of this is speculation. And I think there’s a world for unregistered securities, there’s certain asset classes in certain businesses, which could only be properly backed in use with with with a traditional law unregistered securities. And there’s also room and a growing room for fully registered securities. And that’s the world that we’re looking at, and really moving into. So I encourage all of you to get into conversation. You know, we’re, we’re just trying to figure out how this works. And we’re trying to build a community of people just like when I could have gotten funding, yes, it’s opening up investing to a larger group of people, you don’t have to be part of the 7% Club, all of a sudden to build a company, register your RegA and get it prepared to go public. So the whole idea is this like, together as a community, where we work together, share resources and share ideas, we’re most successful, and I just I really bank, you know, cork onyx, and these gentlemen, for the amazing work they’ve done. Definitely, they expanded my brain massively. So I recommend that you reach out to them on if you’re interested in this, because they’re definitely leading the charge.
Oscar Jofre 1:01:06
But we didn’t expect that. But thank you. I cram your last comments and remarks.
Dr. Kiran Garimella 1:01:13
I have one big key takeaway for people. Number one, obviously Walter. Thank you for joining us. It’s been a great pleasure talking to you. And we learned a lot of course, from you know, because you’re a very practical minded business person, entrepreneur. So we learned a lot. But the one thing I do want to say I also love as a chief scientist, all of these wonderful speculative, you know, what else can we do kind of things. But I also do want to emphasize that many of the things that we’re talking about are actual realities. It’s not like we have to create the infrastructure or the engineering for this. It exists. You have an idea for a stable coin. We can make it happen, right? I mean, these are not speculative. These are practicalities, these are not pilots, these are in production systems that we have today. The engines up, it’s been started, it’s running, you have to sit in the driver’s seat and hit the pedal.
Oscar Jofre 1:02:06
Wow, that was great. So listen, in closing, we went over a little bit. I want to thank everyone today for coming out to the KoreSummit webinar series. If you’re interested, we have another one this afternoon. 330 regulation A end to end What does it mean? It’s amazing that we’re actually able to have these kinds of discussions. And again, if you want to watch any of these videos are available to you for free at our YouTube channel KoreConX or you can go to our educational channel, KOreSummit.io Thank you everyone. Have a fantastic week, Walter Dr. Kiran as always looking forward to