The arrival of cryptocurrencies and ICOs heralded a leap forward in project crowd funding. Despite having opened investment opportunities to anyone capable of overcoming the technical barriers of transactions, legal uncertainty has, to some extent, stifled that transfer of empowerment.
Many within the cryptocurrency-world would prefer to see little or no regulatory oversight at all and believe the occasional rogue project is a risk worth taking to engineer a peer-to-peer system that relies on the individual rather than any supervisory authorities.
Others tend to take the opposite view, and even those occupying the middle-ground see the huge investments and inroads made by the likes of Goldman Sachs, JP Morgan and the often-derided RBS into the blockchain space as a sign that, for now at least, the old regulators will need to be accommodated.
This very simplified assessment serves to illustrate how new companies, especially fintech ones, are having to walk a tightrope when bringing their service or product to market. Smart Valor has given itself the mission of providing “access to digital assets to people around the world in an easy, secure and compliant way.”
Tokenisation of assets, inclusivity, transactions, security and regulatory compliance all provide challenges but it is probably the latter that will conjure the most stress.
In such an environment Smart Valor will initially focus on a limited range of assets before moving onto the second stage in tokenising alternative investments such as private equity, venture capital, real estate, art and precious metals.
With its white-paper, Smart Valor achieve good first impressions. Detailed yet accessible, the 100 page paper conveys a potentially complex subject in plain english and is refreshingly transparent in its token offering. Elements such as these should be standard practice within the industry but a number of high profile ICOs have failed in this area so kudos goes to Smart Valor for showing the way.
The publication clearly sets out the two major roll-out stages of the VALOR platform. It begins with the current state of play where they deal with crypto-currencies and non-security tokens before covering the second phase that comes after the applied-for banking license is granted. This will allow for a full move into tokenising all alternative investments.
It is in this second stage where the project’s more lucrative aspect comes into play as millions of dollars are often required to even participate in these alternative markets. By tokenising and decentralising through the VALOR platform the assets become more accessible and liquid which lowers the threshold for entry.
Generally speaking, Smart Valor will not operate as the asset issuer but rather facilitate the service that allows others to tokenise assets.
One interesting exception to this is the intention of the team to create a tokenised Swiss Franc (CHF). If successful in their application for a banking license they would issue a CHF stablecoin (CHFt), backed by 100% reserves of the Swiss currency. As many FX traders already know, USD has lost around three quarters of its relative strength against the CHF over the last 50 years so if any fiat-backed token could claim to be stable, it would probably be the CHF.
The VALOR platform caters for both sides of any trade, that is to say, both the investors and asset issuers. The investors can be individuals or institutional looking to diversify their portfolio so custody facilities are available for those looking for storage of assets.
Issuers on the other hand, could be a realtor, private company or fund who wishes to offer their products as tokens to the public. Smart Valor will create the necessary smart contracts and carry out all due diligence before listing the product on the VALOR platform and allow for secondary trading of the tokens.
As can be seen, the platform will provide a much wider access to markets usually reserved for high-worth investors and allow for efficient and secure transfer of value.
For the token holders, they will have the opportunity to earn extra VALOR tokens by performing certain tasks such as referring, voting, predicting or strategising on various investment opportunities.
Smart Valor themselves will generate revenue streams from various fees associated with the service such as listings, buy/sell transactions, custody and storage, banking services and commission on provision of services from community members.
The white-paper also recognises that, although there are some fundamental differences between the organisations, upon granting of its banking licence, the team believe they have an advantage in five key areas over the Swiss banking business model.
A number of hurdles have already been cleared by the team, establishing a firm footing to bring the company to the ICO stage.
Started by the founders and six other full time contributors in Q2 2017, Smart Valor established the necessary partnerships with VC funds, technology developers and legal advisors to raise the 1.5 million Swiss Francs (CHF) needed for initial growth.
A year later, the team has more than tripled in size, the Swiss Financial Intermediary status (AML license) had been obtained and a prototype of the Smart Valor platform has been completed and was demonstrated at London’s Finovate Exhibition in March 2018. Such developments attracted an additional CHF 3.3 million in funding from strategic investors.
While early stages of marketing will focus on the home markets of Switzerland, Liechtenstein, the UK and the EU, Smart Valor is intended to be global in reach.
Moving forward during and after the ICO, some of the key milestones to be implemented include:
Q4 2018 / Q1 2019
- Launch of platform with listing of VALOR tokens as first proof of issuance and trading capabilities followed by trading of selected cryptocurrencies, utility and payment tokens.
- Enterprise-grade custody solution for digital assets in partnership with Ledger.
- Complete application for Liechtenstein Banking License and Organised Trading Facility (OTF).
Q2 2019 / Q4 2019
- Team of 75 full time plus external contributors.
- Receive banking license from Liechtenstein.
- Listing and trading of security tokens on Smart Valor.
- Smart contract-based auctions.
- VALOR Chain operational for specific regulatory requirements relating to certain security tokens.
2020 and Onwards
- Expansion of listed tokens.
- Trading extended to securities to provide global pooling of liquidity for less liquid assets.
- Similar platforms networked to enable cross-platform listings and distribution.
The VALOR token is an ERC-20 utility token running on the Ethereum blockchain and will be used to aid adoption of the platform and incentivise participation in growing the network.
A total supply of 100,000,000 VALOR tokens will be generated and 45,000,000 of these will be available in pre-sale and ICO. If any of these tokens are unsold during this period, they will be burned.
Team members, current and future, who complete a minimum of 1 years’ service will be allocated 19,000,000 – tied to a twelve month lock up and a three year vesting period – with the remaining 36,000,000 being earmarked for development of the platform, liquidity management and network growth.
During the ICO, one VALOR will cost CHF 1.00 (Swiss Franc) and can be purchased using BTC, ETH or fiat.
Bonuses were available during the pre-sale phases, with the early investors gaining substantial discounts for the purchase of 15 million VALOR.
As the soft-cap of CHF 3 million has already been surpassed the project have set a hard-cap of CHF 45 million.
Of the four co-founders, CEO Olga Feldmeier is probably the most visible through her being a regular speaker and panelist on the global blockchain events circuit.
With her previous experience as Commercial Managing Partner at crypto-custodians Xapo and high-powered positions at fiat-based institutions such as UBS and Barclay Capital, she possesses considerable insight into how the new and old economies can mesh together.
COO Oliver Feldmeier’s background is in managing large-scale technology projects in the financial arena and Thomas Felber will utilise his experience gained from developing software solutions across multiple industries in his role as CTO.
Prolific security and cryptography author Julien Bringer holds over fifty patents and is the fourth co-founder.
These four innovators are supported by a core team of 35 full time workers in the areas of cryptography, software & blockchain development, financial product creation and legal compliance.
A number of partnerships are already in place and, although confidentiality agreements prevent the full details from being made public, a scan of the list provided in the white-paper reveal names such as hard wallet provider Ledger, the Ethereum Alliance, the Zurich-based ICE Centre, and legal advisors PwC.
Smart Valor are, in many ways, a mirror of their CEO’s event presentations in that they have a certain presence and gravitas that connect with this new phase of blockchain evolution.
This has been recognised by many others within the fintech sector and the company was highlighted by Forbes as one of Europe’s top ten exciting SME projects for 2018.
As part of the Thomson Reuters incubator, they are well supported and connected to other blockchain projects while previous traditional banking experience amongst the core team means they know who needs to be approached in order to obtain that all-important banking licence.
Licensing and regulatory permissions are always notoriously challenging to predict. While the Smart Valor personnel involved in compliance appear capable of navigating such applications, gaining the nod of approval from authorities who themselves are often reliant on political, financial or other departmental control can become a lengthy and frustrating process.
In fact, the team’s decision to pursue a banking license in Liechtenstein rather than Switzerland sprang from the Government’s delay in implementing a suggested ‘banking light’ license for fintech companies.
With the Swiss AML already secured, Smart Valor’s marketplace for cryptocurrencies and utility tokens can proceed, a full banking licence will remove the need to find an external banking partner willing to facilitate services for any crypto-related activity. And such a licence propels Smart Valor into a whole new domain of investment activity.
In the end, the level of success of this progressive and well-presented project will hinge to a large extent on how well the legislative and compliancy requirements can be navigated by the project team. The irony is that those same hurdles could be addressed if Smart Valor itself manages to execute well.
Ratings Score Methodology: a weighted average across three scores: Concept (10% weight), Blockchain Fit (30% weight), Execution (60% weight).
Disclaimer: Please note that all ICO reviews on ICOExaminer are non-technical assessments, in some instances are sponsored, and are very often sentiment-based and should not - under any circumstances - be construed as professional investment advice.