ICOs have raised over 5.6 billion dollars in 2017 year alone, however, many of these turned out to be scams or overly boasted promises by incompetent teams who were cashing in on the crypto frenzy. This has only given ammunition for authority clamp down. It has become a need for an authority like SEC to intervene which may have sent market down crashing in the short-term, however, having clear guidance and processes in place will help the crypto market flourish in the long run.
The biggest issue that ICOs that have raised money or want to raise money to bring their idea to life face, from an SEC perspective, is the fear of being treated as a security.
Although it has been made to sound like a bad thing, being treated as a security token is not an impediment in itself, if the companies raise funds in line with security laws. It is not an easy task though. The administrative and legal costs can keep the brilliant of ideas from raising capital complying with security laws.
Being treated as a security token is not an impediment in itself, if the companies raise funds in line with security laws.
Polymath hopes to address this issue.
Launching an IPO in line with SEC regulations is a humongous task. Not just administratively, but also from a cost perspective. Look at this document from PwC that summarizes the identifiable cost of launching an IPO.
To deduce from the above, if you were looking to raise $10 million dollars, you can easily lose more than a million dollars in just costs of complying. Imagine raising 100 million dollars, numbers might stack up very easily.
This is why Spotify opted for a direct listing to save itself the unnecessary underwriter costs. These direct listing models work for the companies that have the know how and resources at their disposal. However, this is not possible for a smaller player, first due to the minimum amount of capital required to be raised to go public and second the costs associated with underwriters and legal teams.
Private funding was a major alternative for many companies that wanted to avoid SEC over regulation and avoid huge costs of raising capital. However, these private venture capital funds were available to only well connected and/or already successful businesses.
That left the all other players looking for a solution that never seemed to be found, that is, until ICOs came forth.
ICOs offered a great way for many good teams to raise capital without having to sell their souls to the vulture capitalists.
Where there is a great innovation and opportunity, scum shows up inevitably. It also happened to the ICO space, many scammers issued ICOs without regard for any rules and scammed people.
SEC got involved and has been cracking down on the ICOs that could potentially be issuing security tokens without complying with security laws.
Companies have been going to lengths to be identified as cryptocurrency or utility token and not a security token. This fear of being regarded as security token has become a hurdle for some genuine players and also, application of security laws without proper platform also inhibited the wallstreet money from flowing into crypto space.
Polymath promises to make issuance of security tokens, in compliance with SEC security laws, easy and inexpensive.
We are talking about a solution that could relieve breaks on trillions of dollars of investment money that is just waiting to be poured in.
Polymath has a decent line up of team members and advisors, that are well connected to the blockchain and Wallstreet.
While CEOs credentials are not the ones that impress us (his LinkedIn shows most of his credentials as investor and not as an entrepreneur. Co-founder Chris Housser has experience in law with focus on blockchain space.
They have strong technical developers on the team list, according to their LinkedIn profiles.
Polymath’s advisory board is nothing short of amazing including Patrick Byrne, CEO of Overstock, David Johnston,Board member of Factom, Erik Voorhees, CEO of Shapeshift, Anthony Di Lorio, CEO of Jaxx. As we said, amazing.
The fact that the CEOs of worldclass brands are backing and lending their name to Polymath adds weightage to the project.
Days of raising money through venture capital model are numbered. Tokenization is here to stay. It will make capital accessible by small and big players alike.
It will also make it easier for the existing businesses to tokenize their assets to raise additional capital, when needed.
All indications of turning this billion dollar industry into a trillion dollar industry.
NEED for a solution like Polymath exists today and will only grow exponentially in the future. The question then would be, will Polymath live up to the challenge?
Polymath will have to anticipate the changes in law and be nimble enough to tweak their platform to accommodate the changing tides. If they accomplish that, it will be one of the most significant projects in the blockchain space.
This is probably the weakest aspect about Polymath at the moment. Of course, if more and more ICOs launch using Polymath and create a parallel demand in the market OR if Polymath makes contributions using Polymath mandatory instead of Bitcoin or Ethereum or Fiat, then Polymath may be worth a lot. Absent such a mandate (or indication of strong use case) – we are waiting for team to come forth, in the near future, to showcase strong use cases for Polymath tokens within the platform.
Having said that, here is a quick comparison of Polymath with Ethereum and traditional modes of raising funds.
If Polymath ever achieves 10% of Ethereum’s success (as of today, in a bear market, Ethereum commands 49 Billion market cap while Polymath has 106 million, at 10% of Ethereum’s share will need Polymath to achieve 4.9 Billion market cap), it will make Polymath a 46x prospect.
Polymath aims at bringing Trillions, not billions, from the Wallstreet into cryptospace. If Polymath ends up achieving this goal, it will make Polymath a wildly successful project in the crypto space.
Crypto space has attracted lot of con artists along with some genuine players because of the easy money people have made. Think about kind of players we will see as competitors to Polymath since we are talking about Trillions of dollars!
If a brand-new offering from a brand name, say Goldman Sachs or similar, emerges and starts their own security tokens platform, it could seriously limit the extent Polymath can achieve its goals.
Wallstreet smart money will trust a brand name more than a newbie on the block.
Even if a big player doesn’t enter into this space, other blockchain projects could enter into the space with much better tokenomics and network. If and when that happens, Polymath will have to fight for its share.
If Polymath sustains its first mover advantage and succeeds in forming strong partnerships and deep relationships early on, it could play a major role in transforming this billion-dollar crypto space into Trillion-dollar space.
This is a wildcard pick.
We picked it specifically because we want it to succeed massively, because, its success will mean a broader success for the cryptospace itself which will lift all the genuine projects in the space, whether a security token or not.
Polymath could help solve one of the two big issues surrounding the cryptospace: first being custodian services for big players to enter (Coinbase and others are working on this solution) and second being making security model token issuance easy and compliant. Polymath could help with this.
When a project brings such massive value to the entire space, it will help the project to thrive as well.
Do your own research before investing. Crypto space is very volatile, don’t invest more than what you can afford to lose. Opinion, not an advice.