Security Token Market Industry Interviews — Ross Shemeliak Co-founder & COO of Stobox
Originally published at Security Token Market
Since high school in Kyiv, I have been very interested in Economics, which prompted me to study it in depth. I spent 2 years in Germany where I continued to study economics at the Gymnasium “In der Wüste”.
I started my career in finance in a company that advised clients on investments in the US stock market, oil, and cryptocurrencies. I’ve also practiced traditional and crypto trading. In all workplaces, I grew to be the team leader in a record short time.
Monitoring the trends of blockchain, I learned about STO. I started digging deeper and recognized their huge potential. A friend of mine offered me to participate in the Stobox project, and I was glad to join.
If you had the power to change one thing in the world, security token related or not, what would you change and why?
I would like to make it possible for all the people in the world to realize and understand what they do best and what their destination is. Now we live in a world full of information, social networks, cases of success, beautiful life, Instagram, and many others, so lots of people get lost in the noise. Since they strive for other people’s goals, they do not live the lives of their own but the lives of somebody else, which does not make them happy. I believe that if everyone could understand themselves and find what they are best at, we would see a completely different world, with a greater development speed, efficiency, and level of happiness.
Are you looking to service cap table management or public offerings for your clients? Which, of the two solutions, do you see has more potential in the current market?
We provide infrastructure, not a narrow product. Therefore, Stobox Network may be used for both. The first version will be more suitable for offering as it is a more common application for digital securities.
Cap table management in the meaning of comprehensive management of investor relations: distribution of dividends, governance, share transfer processing, etc is much more powerful because this is a service that every single business needs. This direction of applications will be growing in the future.
Which jurisdictional compliance standards do your tokenization services cater to? Are you looking to work solely with European issuers or are you positioning yourself to provide your services to clients all over the world, including Asia, Africa, and the US?
We are not technically limited to any single jurisdictions. Clients from any corner of the world can use our API to encode their local regulations. The first version will launch with built-in EU Prospectus Regulation and US Reg D, more will be added in further releases.
How does your proprietary blockchain integrate with other protocols? Are you prepared to interoperate with standards built such as ERC-1404, DS protocol, and others?
Recently, we decided to launch Stobox Network on top of Ethereum and decide on building a proprietary blockchain later on. The reason is in particular because that would make integrations with other service providers and protocols much easier.
We will launch a separate private blockchain to target larger institutions that prefer private networks. We will decide whether it needs interoperability with other standards based on the market feedback.
What advantages does Hyperledger Fabric provide you as an issuer that other blockchains, such as Ethereum, Tezos, or Stellar cannot?
Key advantage is privacy, critical for funds with secret strategies and investments.
Also, private networks are controllable, you can go to the court with the network operator. In plain language, big guys want to feel that they are in control. In public network governance is distributed so they cannot really influence anything.
What is the timeline between your DLT Network MVP product and the full launch? What are the planned additional features?
MVP is already a full launch that can be used to conduct an STO. Additional features include more regulations and more advanced functionality for securities operations.
In terms of regulations, we look not only at regulations of securities offerings but also corporate law, shareholder protection and many others. We want Stobox Network to be universally used for securities, which requires going deeper into more advanced stuff.
More advanced operations include several types of securities offerings, various corporate actions, securities lending and borrowing, convertible securities, etc. We want Stobox Network to be suitable for enterprise-grade use cases.
Are you currently working with any secondary liquidity providers for future listing?
We are communicating with most existing providers such as MERJ and Blocktrade, they are very open. However, our view is that exchanges don’t work well for security token liquidity, and P2P marketplaces are a better fit as they are less regulated. We will be working in this issue as well.
We explore it in greater detail in our article, see it to learn more.
What is Stobox’s competitive advantage over other issuance platforms in the security token industry?
Most solutions now built compliance using a whitelisting scheme: they manually select certain wallets that are allowed to hold tokens. We use a more scalable approach where the permissions of an investor are defined by its attributes. For example, if an investor has attributes “US resident” and “professional investor”, and the offering is done under reg D rule 506 ©, it will be eligible to invest but not if it has the attribute “retail investor”. Such a scheme is more scalable and error-proof.
More advanced regulations and operations built-in.
Simple access via API.
Flexibility, ease of customization.
Can you give a few examples of ideal clients that could leverage your platform? (Country of origin, raise size, asset type, etc)
Country of origin does not matter but the first version will be tailored to investors from the EU and US. Raise size doesn’t matter at all. First asset types to be served are shares and revenue sharing certificates. Bonds, options and more complicated things will be available later.
These are not significant limitation, we may build the needed features based on a specific client request.
Have any issuers successfully issued a token using your technology?
We have supported several STOs in 2019. However, we didn’t use Stobox Network for that. What is more, Stobox Network has appeared as our response to the fact that we couldn’t satisfy the needs of our clients with the existing technology.
Where can interested issuers contact you for further information?
You can find me on LinkedIn:
or feel free to contact me via email:
Originally published at https://medium.com on July 2, 2020.