- Feldmeier thinks tokenization is most valuable in illiquid asset classes because it can provide a cheaper alternative for investors in to more expensive investment vehicles like venture capital and private equity.
- Switzerland will become a hub for crypto talent, because of the ambiguity of security laws in Switzerland, which will create more opportunities for exchanges.
- Believes bitcoin has enough potential to go to $100,000 within one to two years, but says the retail investors bitcoin’s recent rally has attracted is adding to bitcoin’s volatility, which hurting the cryptocurrency’s ability to appreciate.
Business Insider’s Sara Silverstein recently spoke with Olga Feldmeier, CEO of Smart Valor, at the World Economic Forum in Davos. Smart Valor is is a decentralized marketplace for tokenized alternative investments. The following is a transcript of the interview.
Sara Silverstein: We’re the world economic forum in Davos Switzerland outside the Microsoft Cafe. I’m here with Olga Feldmeier the CEO Smart Valor. Thank you so much for joining me.
Olga Feldmeier: Thank you Sara for inviting me.
Silverstein: So help me understand — what is Smart Valor?
Feldmeier: Smart Valor is a decentralized marketplace for tokenized alternative investments.
Silverstein: And what is a tokenized alternative investment?
Feldmeier: I kind of guessed that you will ask about tokenized, but not about alternative with your background. Well tokenized — VC first implementations of tokenization today it’s basically ICOs right? Where you, you know, taken ownership in a company that can represent utility, or, you know, certain usage rights. Well tokenized equities also come in right?
Feldmeier: But it’s basically asset or right backed to concede right? And, you know, it was very clear to see that, you know, this tokenization of equity or participation and startups. This is just the first. Actually, you can tokenize anything right? If you like my coat. Do you like my coat?
Silverstein: Yes, I do very much.
Feldmeier: Maybe I become famous and this one becomes, you know, something for thousand bees116, then we can tokenize all this coat.
Silverstein: So if you’re tokenizing alternative investments does that mean that you’re going to create a platform for people to raise money through tokenization for hedge funds and things like that?
Feldmeier: Yes, you know, there are a lot of like like — alternative investment space is huge right? There are so many different asset classes. I think where tokenization is most valuable is more in illiquid asset classes right? For example such as venture capital or private equity right? Why because you see by the nature of those investments you are binded, you as an investor
Feldmeier: binded for a very long time right — seven eight years. Plus, you know, the stakes if you want to participate in an interest in private equity fund, stakes are very high. So the tokenization like imagine just very simple example we will take 20% of our bugs212 infrastructure fund three-year f 214, and tokenized chisels 216 20% right.
And this is kind of like becomes a liquid part of this fund right. Because the token can be, you know, it’s like bitcoin
Silverstein: among people
Feldmeier: And it can be traded
Feldmeier: On the blockchain
Silverstein: So even though the token in itself isn’t liquid — I mean what it represents, but people can exchange
Feldmeier: Exactly exactly and but the liquidity’s going to be created, you know, through this fractional ownership that a lot of people participated on a global scale right? So you have like look at bitcoin; look at cryptocurrencies right? A lot of them also don’t have such a huge amount of people involved in them right? And nobody knows like why, you know, cardano 257 should be valued at this or that right? So all the same problems that we have with traditional, traditional asset classes right? But through created, you know, supply and demand and efficient way to exchange ownership on the blockchain right? So this is how we create more liquidity.
Silverstein: And what stage are you in with this project?
Feldmeier: Well you see to all of those projects that involve, you know, cryptocurrencies and and new applications of blockchain technologies, the key implementation hurdle is regulation right? Because you see for us, that’s also — what’s so special for us? We accept money through cryptocurrencies right? You can wire — it doesn’t matter where you are you can wire us your bitcoin. And from bitcoin you can invest in alternative investments. So the biggest challenge is regulation. And we are working on this one right? So we are working on, you know, specific licenses that will enable us to run this marketplace’s Amazon right? And on building the technical platform, the licensing process is still in place. But we’re going to — we hope that we’re going to launch within the five to six months.
Silverstein: Great and before this you were at Coinbase competitor Zappo.
Feldmeier: Yes, exactly
Silverstein: Can you tell me what your role was there?
Feldmeier: Officially I was commercial managing partner. The fact that I was most of the time in charge of regulatory issues that we were facing here in Switzerland. That was quite interesting experience, because, you know, we were one of the first companies coming from US here to Switzerland to try to find proper regulatory solution right? Back in 2013-14 as a Bitcoin business you were illegal anywhere right? Everybody was like, “oh bitcoin — we don’t touch that,” right? And fiedmas 455 with regulator actually did a great job of, you know, looking into our business, understanding how it works. What does it mean, you know, secure custody of private and public keys right? And, you know, giving it away to to find a proper, you know, regulatory solution, not trying to regulate it like really hard and to say, “Oh guys you need a banking license.” They, kind of, did it at the meeting, but they change their mind later, which enables us then later to get a license as financial intermediary being you know regulated through self-regulated organization.
Feldmeier: And it’s a big difference, you know, if you have to apply for banking licence or just a serile 540 right?
Feldmeier: So that was very big success case I think for the bitcoin industry as such, not just for example.
Silverstein: And do you think Switzerland is really going to become a hub for crypto talent?
Silverstein: Is it already happening?
Feldmeier: It can — it will take awhile, you know, because look what we had until now. Like we had the biggest cases — Zappo. And now we have with ICO, you know, a lot of like probably powerful, the biggest ICOs are taking place in Switzerland. Because Swiss law is not so clear about, you know — it leaves a space about definition of security or is it not security right? So and even if its security, it’s not that advanced 620. If it’s security in US, right? But still even in this space you need much more clear clear regulation. And I know that fiedma 630 is working on this. They’re going to release something within the next several weeks. But also, you know, that that’s just one part. But we need some solution for banking like, you know, for fintech companies or a blockchain companies that kind of like, you know, in that space and that normally would require banking license. So we need like the small banking license.
Yeah, so hopefully this one is coming. Lichtenstein already introduced this one, just one million.
Silverstein: Oh wow
Feldmeier: You can run the bank, so this is exciting. This is options that we are going for and of course, you know, Switzerland’s. And needs to create also proper environment for startups to be able to operate out of Switzerland; to be able to hire, you know, people from abroad, which is today very difficult.
Feldmeier: You know, a special tax regime for startups, so like, you know. The president of Switzerland last week announced it in St. Moritz he would like to see crypto nation Switzerland appear in right? I’m very happy about that because it’s kind of like commitment from the highest political level. They can just say it and don’t do anything about it. Now they really need to do it right? So I’m very excited about it.
Silverstein: And generally like the regulation comes in and does create a lot of difficulties, but it also helps protect people. And with any new sort of structure, financial structure especially, like with all the ICOs we’re seeing for people who are just getting interested in this, what percentage of those do you think are nonsense?
Feldmeier: For myself?
Feldmeier: It was, you know, it’s kind of developing it’s a dynamic process. It’s been I think quite bad for a while. I would say like two-thirds or maybe even 80% were like really shady stuff. Like you look at people and you look at their background, and you think, “oh how much you want guys? 20 million really?” But this is changing. Now I see a lot of companies that, you know, would go for venture capital funding — great companies. You know, guys already did one startup before succeed or didn’t succeed, but on the good track right?And now they just like, ‘well if I go to VC, I mean I have to spend one-and-a-half year doing all the road shows.’ And then they get just, you know, enough for one and a half two years. So ‘why don’t I go for ICO right?’ So now we see more and more companies that would otherwise go VC fund. So I think the quality is improving. And this is what we need in this space right?
Silverstein: Great and last question — what do you think about bitcoin’s price? Where do you think it should be what do you think the true value of a bitcoin is?
Feldmeier: Oh the true value. That’s a good question.
Silverstein: I use that very loosely.
Feldmeier: Yeah, well, you know, we kind of have tried to also to analyze, you know, the true value. You know like with actually remodeled, you know, how — use cases of bitcoin. You know, how much bitcoin? Which price at which speed is going to be used in remittances business? How much in payments? How this drives the demand rate, and how is the supplies behave? And then calculate the price. But if you look at those models, like the numbers are really great like 500,000 and so on right? So it’s difficult to say right?
But I truly believe bitcoin has enough potential like within this year — maybe two years — to go to 100,000
Feldmeier: Right? And of course in the meantime — on the way there — it can drop again 70% right? But it’s just the way it is. I think what is worrying a little bit is that, you know, this recent price rally, you know, it created — and also with other cryptocurrencies right, like look at ripple or steller 1038 see were like 30,000% last year right? So bitcoin was nothing in comparison to those. But, you know, the point is like this now attracts retail investors. And this is actually not such a good thing because retail investors cannot afford to lose this money right? So then bitcoin does again this minus 50%, which we are used to right? But those people get panicked right? They will sell and that will drive even more volatility right? And we don’t need more volatility in bitcoin right?
Silverstein: Great Olga. Thank you so much for joining me.