Monday 10 August 2020

FinanceMalta’s final BlockFinance event for 2019 delves into STOs

FinanceMalta’s last BlockFinance event for 2019 focused on Security Token Offerings (STOs) and featured a wide range of expert speakers on the matter, as well as an interesting debate on opportunities, challenges and solutions for adopting STOs.

The event was organised in collaboration with the Malta Blockchain Association and was sponsored by Gonzi & Associates, Advocates. 

An STO is a process similar to an Initial Coin Offering (ICO) whereby an investor exchanges money for coins or tokens representing their investment. However, unlike ICOs, STOs take this a step further and distribute tokens that fall under the status of securities. They are linked to an underlying investment asset in a way like stocks, bonds, real estate investment trusts (REIT) or other funds.

In his introductory speech, Kenneth Farrugia, FinanceMalta’s outgoing chairman and Governor on the Board, welcomed everyone and spoke about the speed with which the Fintech sector is progressing, and the importance of stakeholders being aware of and remaining up to date with the significant changes taking place.

David Gonzi, Partner at Gonzi & Associates, Advocates, focused his presentation on the definition of an STO, and provided answers to the question of whether security tokens are the securities of the future. Following that presentation, Hagen Weiss, Senior Advisor at BaFin provided a comparative analysis of the German STO framework to other jurisdictions.

Andre Zerafa, Partner at GANADO Advocates, spoke about the need for legislation and regulation to catch up with technology, and also questioned the role of intermediaries in such a new transactional environment.

The second part of the BlockFinance event started off with a very interesting panel discussion chaired by Nathan Fenech, Senior Manager Securities & Markets Supervision at the MFSA. The panel members were Malcolm Falzon, Partner at Camilleri Preziosi Advocates; Omar Zerafa, Advocate at Zerafa Advocates; Jonathan Galea, Managing Director of Blockchain Advisory; and Hagen Weiss, Senior Advisor at BaFin. The discussion centred on various interconnected themes including STOs’ policy, legal and regulatory compliance regulation. The risks and rewards associated with STOs was debated at length, alongside the need to ascertain the operational aspects of executing such transactions.

The last part of the event consisted of a presentation by Lorraine Vella, Deputy Head, Securities and Markets Supervision at the MFSA, who focused on the local regulator’s consultation exercise on STOs earlier this year. She highlighted some of the challenges and the way forward proposed by the MFSA.

The closing presentation was delivered by Davide Benaglia, Strategic Partnerships Director of Korporatio Inc. who outlined the advantages of Blockchain technology applied to corporate governance, and how this could attract companies to Malta.

Patrick L. Young, Chairman of the Malta Blockchain Association chaired the event and delivered the closing remarks.

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