- Safely storing and securing digital assets can be tricky, especially if the password is lost or stolen, so novice crypto investors often get put off investing in crypto markets due to this issue.
- “If a retail client decides to store their digital assets [with us] and not trade for a year or two – or the client is just a long-term investor – then they don’t have that same worry of – well I’ve upgraded my device and I forgot to protect the private keys or the seed password to my other wallet solutions,” said Phil Woods – Abele Group CEO – in an exclusive interview with BitStarz News.
- Custodial platforms – such as Abele Trust – are giving both retail and institutional investors a new way to safely invest in the crypto markets and store digital currencies.
Safely storing cryptos is the aim of the game for any investor, especially with supposedly ”unhackable wallets” crumbling upon attack. Crypto exchanges are unsafe places to store crypto tokens and passwords, as hard drives are often lost or damaged, whether it be maliciously or accidentally. While some companies have taken storing passwords to the extreme and begun placing them in DNA strands, the Abele Group is making life simpler with its new Trust platform. By giving users the ability to safely store and trade their crypto assets across a variety of exchanges, the Abele Group is revolutionizing the way we interact with digital assets.
Alex Meears recently spoke with Phil Woods – Abele Group CEO – to find out more about the Trust platform, along with how it is set to revolutionize the digital asset storage and trading world.
AM: What made you want to transition from Forex to blockchain? Where did the blockchain interest occur?
PW: For me, I would say the biggest driver was realizing the power of the technology beyond just payments and stores of value. There were some specific instances that I can’t share during my banking career where I thought “wow,” if we had a blockchain solution in place we would not have just lost X amount of investor dollars.
From there, I started speaking to some hedge fund managers, friends, and enthusiasts in the community who were all paranoid about the security of their assets. One of the people I spoke to lost a significant amount of Bitcoin because he stored his private keys on a server, which he then replaced a few years later. During the height of the markets in 2017, he went back to the old server to get his private keys and could no longer find them. The most frustrating part for the people I spoke to is that the asset hadn’t disappeared, it’s still there on the blockchain but their access to it no longer exists.
Then I thought, it doesn’t make much sense to me if you’re telling me this is the future, but it’s not fully human-friendly yet. So, my involvement in the blockchain space is just because of the needs that I saw by speaking to former colleagues and friends.
AM: Can you tell us a little bit about your vision and goals for the product suite?
PW: The first product in our suite is what we call Abele Trust, it’s a digital custodian designed to safely store and secure digital assets. It also gives users the ability to trade foreign exchange, move assets between exchanges or OTC players and lastly provide margin repo trading and some peer-to-peer lending. So, by placing all those features in an organization – or within one platform – effectively we’ve become a prime broker for institutional accounts and a custodial platform.
When it comes to retail accounts, we’ve become the first point of entry. Largely because through the platform you have not only liquidity through the exchanges and OTC players, but you will also have safe security and storage. If a retail client decides to store their digital assets [with us] and not trade for a year or two – or the client is just a long-term investor – then they don’t have that same worry of – well I’ve upgraded my device and I forgot to protect the private keys or the seed password to my other wallet solutions. Therefore, when I come back two years later I no longer have access to it.
The platform is mainly designed for institutional users, but we will also have retail clients and I think that’s in-keeping with the blockchain ethos. When blockchain was originally developed, the first people who bought Bitcoin were sold on the promise of decentralization. However, the market is slowly learning that you need a hybrid approach to crypto trading, so we are offering some centralized capabilities, but with decentralized features, meaning that the user then decides how they interact with the platform, as opposed to us as a company or project determining the path these users walk down.
When we hold cryptos – as long as that crypto hasn’t been deemed a security – we operate similarly to an unregulated bank, but when we hold client cash on the platform we will be doing that with our banking partners because fiat is heavily regulated.
AM: The SEC isn’t being too kind to BTC ETF applications at the moment, what made you want to apply for SEC A+ regulation for an ICO?
PW: The ETF regulations has to do with the fact that the market from a provenance perspective has not yet dealt with money moving in and out from illicit wallets or wallets, which have been tied to illicit organizations. For the SEC to consider approving an ETF, you need an agreed upon standardized valuation method between crypto participants and some of the larger regulated accounting firms around the world.
I understand why the SEC is taking that approach, but what they are saying to the crypto market – but the crypto market hasn’t yet moved on – is how do we apply a valuation standard. Meaning that we don’t have a daily mark, as the markets never close, so how do we value it from a standardized approach, so we all know at least at one point of the day what the value of Bitcoin is or what one Ether is – and that’s the issue.
I decided personally to apply for the regulation A+ because I don’t look good in orange or grey jumpsuits. I think if you’re going to spend $100,000 to $300,000 with a law firm to try your best and make your token a utility, you might as well spend the same amount of money and have peace of mind. If you think about it, in most jurisdictions that follow US or British common law – even China – if you raise money from more than a handful of individuals who are not your friends or family, in most legal jurisdictions that broadly fits the definition of a security. Yes, you could talk about the utility nature of most of these tokens and coins that exist, and the SEC has taken the approach that Bitcoin and Ethereum are not necessarily securities and that they are utilities and therefore are regulated more like commodities. However, if your project is a project like ours where we aren’t just building one deliverable, it makes sense to apply for the regulation.
We actually started the process last year during the height of the price boom, and we have just followed it through with some official filings earlier this year. We have been going through the process of responding to SEC questions, and quite honestly it has been a mutual educational experience for both sides. It’s interesting to see how the SEC looks at the world and they have asked some very specific and technical questions about blockchains, how they work, and how they can be investor friendly. So, we’re out taking the birthing pains and teething pains of this process for the rest of the industry.
AM: Why did you decide to do an ICO rather than an IPO?
PW: I don’t actually see a difference between an ICO and an IPO. In fact, there are institutional investors that invest in ICOs. Most of the comments available now right now say that between 70 and 80 percent of all ICOs have institutional money in them, especially now with BTC and Ether prices currently on lows for the year. Most of the deals being done and ICOs are significantly backed by institutional investors. These institutional investors use special purpose vehicles such as VC funds or hedge funds to gain access.
Ultra-high net worth individuals and traditional pension funds are currently missing out on the ICO market at this stage. I would also say some of your insurance companies that traditionally invest in a lot of early-stage tech are missing right now. Due to the fact that our ICO is effectively selling equity in the company, we felt it was important that we applied for the regulation A+ exemption.
I feel there’s no difference between our ICO and a traditional IPO, and I wanted that because my view of the future is that tokenization is slowly how the economy is going globally and equities, bonds, and mutual funds will all come through the market in a digital format – we want Abele Trust to be one of the first issued. I think in a few years’ time there won’t be ICOs or IPOs, they will just be known as initial equity offerings done using smart contracts.
AM: What will the ICO tokens be used for on the platform? Will they be used to cover gas fees, trade commissions, etc?
PW: So, the token is a security in a sense that yes, it’s a share in the company, but it’s a utility in the sense that in order to access our platform and our authentication process you will need our token – you will need several tokens in fact. Once you are on the platform, you’ll need an additional number of tokens for various services and features. Ultimately as we start to release more tokens in the future you will also have the ability to pay for services using a token.
There is an overall cap on the number of tokens that we can potentially issue on the smart contract – we’ve communicated that as 10 billion – but we’re not going to float the market tokens. Effectively, what we’ll do is manage it through an auction process, as more users sign up we’ll conduct monthly auctions just to ensure that the value of the token has less initial volatility that some of the other projects.
We just want to be very thoughtful and we recognize that if you are truly trying to bank people all over the world you need to consider personal GDP. Take Indonesia for example, it’s one of the top 10 bitcoin holders in the world. They have per capita GDP of less than $3000. It really makes sense if we had a coin that was beyond the reach of someone in Indonesia. Yet, when you look at it that people in China or in the U.S. who have on average per capita GDP around $10,000.
It didn’t make sense to have a solution that costs you $100 to $200 per year. We were just trying to balance all of that, because without owning a coin you cannot sign up for an account with Abele. We wanted to make sure that we didn’t have a premium coin that traded like Bitcoin or Litecoin. We wanted something that was in the reach of most middle-class individuals.
AM: What framework are you planning on using for your token?
PW: Initially we’re issuing an ERC token simply because it’s the broadest and most liquid framework that people generally like and agree upon. Before switching to a native token – or potentially using one of the existing frameworks that are coming out now – we’re testing a number of solutions, and one of our favorites is the multichain hyper Ledger Hedera from Hashgraph. We are also looking at NIM and NEO.
I’m a big believer that no one project will completely own the blockchain space and that what you will find over time is that specific blockchains render themselves to specific use cases more easily. I’m a big proponent of potentially using Hedera for a payment solution, but at the same time for something that needs less scalability then it might make sense to use a multi chain NIM or NEO for that specific use case. Internally, we like to say we are blockchain agnostic. We just want to use what has been tested and proven workable for specific use case, preferably if we use multiple block chains on a use case that’s great.
AM: How do you think platforms like this will make people’s lives easier?
PW: I’m a big fan of the early pioneers like Coinbase, Gemini, and Binance as well as a lot of other crypto exchanges around the world. For example, let’s take a step back. If I have equities or if I own shares of a mutual fund that happen happily trade on the New York stock exchange, a Russian Exchange, ICE, or Dax – I don’t leave all of my money at that exchange along with my assets. It doesn’t work and doesn’t make sense. In order to truly have a global organization you need to think through the nuances of these specific economies and people’s daily lives.
I’m a big believer that over the next five to ten years that – it’s just from a macro perspective – the world will use more smart contracts. if that’s the case the smart contracts and the derivatives of those tokens and coins need a home. So, that’s why we’re building Abele Trust. It’s really that simple.
AM: What is your take on smart contracts? Do you think they are quite vulnerable and need a bit of work still?
PW: The way we view smart contracts and new technologies are let’s embrace them, let’s understand, let’s place that into a UAT environment, and let’s test them. If you’re familiar with the Polkadot hack from last year, in that project they did all of the right things in terms of having the smart contract audited, they had some other security audits, but the one thing they failed to do was audit the library that the Smart contract came from. That meant the wallet had a backdoor into it and that $150 million – at the time – is essentially rendered inoperable because of said backdoor in that particular wallet. What we say is we embrace new technologies, but we also want to see live tests, and that means testing it either with us or with other people.
AM: After your long discussions with the SEC, how do you think it will eventually rule on Ripple? Will it classify it as a security or as a utility token?
PW: I would never be so bold as to speak for the SEC – or any regulator for that matter – but what I will say that is if you follow their logic on how they reached the decision for Bitcoin and Ether it will begin to make sense. I think it comes down to the fact that Ripple actually existed in one form or another before Ether. Ripple also has more live use cases in terms of its utility function, especially with remittances in South East Asia. I think it will come down to how the founders issued the first tokens and who owns the majority of the outstanding Ripple. If regulators look at the concentration of Ripple in the hands of a few individuals, they might just say, okay this is more of a security than it is necessarily utility.
This was difficult to do with bitcoin because technically no one really knows who the founders are. and with Ether they were smart to have the Ethereum foundation. So, even though you do have genesis holders that own quite a significant about Ether, when you look at that percentage of an overall number of an ever-expanding ERC framework, it’s not that large. Whereas with Ripple, the concentration of Ripple in the hands of founders could be significant and material enough to regulators where they say okay this looks more like a security. To be quite honest, I’m not familiar with how much Ripple the original holders still have, but I think that that’s an issue that regulators will look at.
AM: If you had to give some advice to people looking to start their own blockchain projects, what advice would you give them?
PW: I would say, ask yourself: do you need a blockchain? If you need a blockchain, why? If you need blockchain could you use the blockchain just in the background without necessarily issuing a token or coin? Now, and if you can answer those few questions then I think it determines the path that you must walk down.
An ICO project is going to require a lot of stamina and discipline, because a lot of the ICOs that were conducted with just an idea. Quite honestly, most of them had whitepapers that if people go back and read now – and actually read them properly – people would say well wait a second, why did I invest in this project. Now the market is demanding a product, it’s demanding a demonstration of that product and it’s demanding more competent teams, and it’s looking for teams have either run blockchain or your project before or businesses. So, I would just tell people to realize that the time period between when you start the project and when you actually begin the ICO is about six to nine months. During this period spend a lot of your time working on the product before necessarily doing the marketing and the hype-like part of the exercise.
AM: When will Abele Trust go live? Do you have a set date, or are you waiting to hear back from the SEC?
PW: We are delivering the first version of Abele Trust somewhere in the late November-early December timeframe. Before that, we will have a few beta releases just for people who signed up on our platform. There’s a signup button for people who want to be some of the first people to try and test it. Then, members who participate in our ICO automatically have an account with Abele Trust, so they will see the platform first before we open it to the general public and other institutional investors.
AM: Finally, what do you think the price of Bitcoin will be by the end of the year? Are we going to see it fall further, or could it recover slightly?
PW: I think the SEC news is priced-in already, meaning that negative news from the SEC shouldn’t drive the Bitcoin price down. Positive news from the SEC will cause the price to rally. There seems to me to be a floor and around $5,800 per Bitcoin and a ceiling at around between $7,500 and $8,000. I honestly believe that we’re going to stay in the range that we’re in.
I feel the price is actually driven more by overall sentiment in equities than it is necessarily by news from the crypto space. The price between Bitcoin and global equities – especially tech stocks – is quite highly correlated right now, which tells me that there’s a convergence of the investor profile and so people are negative on equity sentiment, you see Bitcoin has a bad day at the office. Whereas when stocks are trading flat and trading higher, you could easily have Bitcoin trading above $7000. So, my price range for you is between $6,000 and $8,000 and that’s where we will remain until the end of the year. If you do a simple correlation plot of S&P 500 and Nasdaq with the price of bitcoin over the past year you’ll see that the correlation is firming and it’s quite positive.
We don’t have long until Abele Trust goes live, and when it does we could see a new wave of institutional investors flooding the crypto markets. At BitStarz News, we know how important the latest news is to you, that’s why we hunt the cryptosphere to bring you the latest news and interviews with leading minds from the industry.