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Fintech start-up Laureate chooses Bermuda

A fintech start-up that wants to bring the power of blockchain technology to the asset-management industry has chosen Bermuda as its home.

Laureate Digital Securities intends to enable the “tokenisation” of investment funds to create greater liquidity and access for new investors, as well as bringing greater efficiency to fund administration.

While others in the industry also see the potential for blockchain-based disruption, Laureate Digital believes it has solved one of the key practical challenges through its “institutional-quality” platform for the trading of digitalised investment fund securities, or tokens. This, it argues can “build a bridge” between blockchain and the traditional asset-management industry.

In an interview, Nicole Biernat, president and chief operating officer of Laureate Digital, said this year's legislation that created a legal and regulatory framework for initial coin offerings and digital-asset business was a major factor in the company's decision to base its headquarters in Bermuda.

“There has been a lot of regulatory uncertainty about token offerings,” Ms Biernat said. “But the ICO legislation created by the Ministry of Finance and the Bermuda Monetary Authority brings the certainty necessary to create an institutional-quality product.”

Ms Biernat views Bermuda as the leading jurisdiction for the confluence of blockchain and the asset-management industry.

Martin Wörner, the company's chief technology officer, explained the efficiency benefits of blockchain. “At Laureate Digital, we strongly believe that the days of paper-based subscription forms and confirmation letters from administrators will come to an end, and secondary market trading in blockchain-based securitised funds will be the norm,” Mr Wörner said.

The securitisation of investment funds on a blockchain has great potential benefits for alternative asset managers and investors alike, Ms Biernat said.

“For investors in asset classes like real estate and private equity, the big downside has always been that the money is locked up for seven, ten or 15 years,” Ms Biernat said.

“If the fund is tokenised and can be traded, then it gives institutional investors liquidity and allows them to easily rebalance their portfolio, and it gives investors access to asset classes that they may not have invested in before.”

A blockchain is a digitised, decentralised public ledger of transactions. Best known as the accounting basis of cryptocurrencies like bitcoin, blockchain is today appearing in a variety of commercial applications.

Given that it creates an indelible record that cannot be changed, enormous potential is seen for blockchain technology applications in business that involve a lot of paperwork and verification processes, such as shipping and banking.

Ms Biernat believes blockchain will “revolutionise” the asset-management industry, particularly in terms of efficiency of administration and auditing functions, greater liquidity and the diversification of funds' client bases.

Laureate's founder and chief executive officer is Lawrence Newhook and like COO Ms Biernat, he has more than 20 years' experience as an asset management professional. The pair have the same C-suite roles at Laureate's sister company Alpha Innovations, an asset manager. Laureate and Alpha share an office in New York, on Madison Avenue.

Ms Biernat will relocate to Bermuda to lead the island operation, based at 41 Cedar Avenue, Hamilton.

She said all her discussions with different parties on the island over the past year had convinced her that the island recognised and embraced the potential of blockchain.

“The BDA [Bermuda Business Development Agency] have been phenomenal in introducing us to exactly the businesses and people we should be speaking with, like auditors, fund administrators — even the real estate people to find our offices,” Ms Biernat said. “They could not have been more helpful.

“We've also met twice with the BMA. To have had that opportunity to explain what we want to do and to answer their questions was beneficial for us and for Bermuda.

“The island has all the different pieces for blockchain and asset management, so it was a no-brainer for us to domicile in Bermuda.”

Sean Moran, interim CEO of the BDA, said: “We're particularly excited that such an innovative company has chosen Bermuda as its global headquarters at a time when we are building a world-class platform for digital asset businesses.

“Laureate Digital is the first start-up to merge asset management and blockchain technology in this way, and it signals an evolution for the funds industry.”

For more information about Laureate Digital Securities, visit www.laureate.io

Opting for Bermuda: Nicole Biernat, president and COO of Laureate Digital Securities

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Published September 24, 2018 at 9:00 am (Updated September 24, 2018 at 1:05 am)

Fintech start-up Laureate chooses Bermuda

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