Why Uber’s First Developer is Investing in ICO RegTech
Conrad Whelan joined UberCab.com as a member of the founding team in April 2010. As the company’s first full-time engineer, he helped to build the very first version of the app. He was a key team member through the initial launch of the product and development of many key pieces of its early technology.
Uber’s user base grew like wildfire, but with that kind of growth – some people got burned. Primarily this was because the company was disrupting a highly-regulated industry: transportation. Uber’s promise of a personal driver at the touch of a button turned the industry on its head and hit a few major speed bumps along the way – especially on the regulation front.
A perfect example of these challenges took place in late 2017 when the Québec government announced new policies requiring Uber drivers to go through a 35-hour training session, which is the same as what local taxi drivers must complete. Uber subsequently pulled out of Québec. Anti-Uber protests in London, Botega, Santiago and beyond by taxi drivers also continue to cause issues for the popular ride-hailing app.
Here in 2018, initial coin offerings (ICOs) are on a similar growth trajectory as Uber. The use of ICOs as a means of funding companies is far exceeded venture capital financing in 2017, with companies raising hundreds of millions. While this is exciting, regulatory controls have not kept pace with this surge, and some have taken advantage of this fact with outright scams. Further, $400 million has been stolen from ICOs by hackers since 2015.
These challenges represent opportunities that have driven tech industry veterans like Conrad Whelan to bet on RegTech, including iComplyICO, a blockchain agnostic platform that automates compliance procedures for initial coin offerings (ICOs) and other digitized assets. Whelan is an angel investor in the platform and told me “ICOs and cryptocurrencies are creating amazing opportunities to fund companies in new and interesting ways, but there is still a need for ensuring that stakeholders are treated fairly and honestly with this new kind of fundraising.”
A large number of ICOs or crowd sales issued today are tying tokens or coins to shares in a company, but instead, they are tokenized versions of a product, service, or asset, or a promise to invest funds for a particular purpose. But if the issuer doesn’t own or have the ability to produce the underlying asset, the purchasers may hold valueless assets.
On July 25 of last year, the SEC announced that tokens would be regulated as securities if they look like them. Jay Clayton, the SEC chairman also famously remarked that: “I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of security.” A task force has even been set up to enforce laws for ICOs that resemble securities.
iComplyICO solves the problem for legitimate ICOs, facilitating investor protection and compliant secondary trading. Further, what the company calls “pre facto” compliance makes it possible for both ICO issuers and ICO investors to be assured that legal, financial and regulatory compliance procedures are adhered to from the beginning, and throughout the lifecycle of the token, regardless of the protocol that the token lives on.
“Similar to Uber’s situation, ICOs were not technically regulated, which has led to this wild-west climate. However, much the same as with Uber, governments are beginning to adapt to innovation and are developing regulations that will impact how ICOs can be conducted. This is where iComplyICO comes in.” said Matthew Unger, Founder, and CEO of iComplyICO.
“I invested in iComplyICO because I liken the ICO boom to the San Francisco gold rush, and in that case, the most sustainable money made was not in actually finding gold, but instead building the tools for the influx of prospectors, miners, and industry that followed,” said Whelan. iComplyICO is currently releasing a white label of the prefacto protocol for the Ethereum network and partnering with ICO advisors to support ICOs with global compliance for secondary trading.