Adnan Javed acts as the Legal Advisor for ETHLend

Adnan has worked on numerous blockchain projects to date including large scale bespoke blockchain projects across internet of things, finance and payments sectors. 3 years ago Adnan discovered Bitcoin which led him to explore blockchain applications and use cases. He has a keen interest in how blockchain technology will advance in shaping all industry sectors from an adoption, regulatory and policy perspective. His personal pursuits include reading, discovering new technologies, focusing on innovative inventions and traveling.

Adnan Javed

Hi Adnan, thanks for taking the time to talk with me today. Where are you currently located?

I am based out of Melbourne, Australia.

What brought you to ETHLend?

I am a strong believer in bridging gaps and solving problems through technological innovations. Today. there exists a gap in the global lending market where only institutionalized lenders are the active and dominant players. The lending market is also unavailable to the unbanked, unfinanced and the uncreditworthy (one such example is GFC of 2008 which affected creditworthiness of a generation). Blockchain is one such technology to enhance decentralization, trust and transparency. The concept of decentralized peer to peer lending on Blockchain is an interesting and innovative solution to equalize the lending market while extending the lending service to unbanked and unfinanced people. This powerful vision drew me towards ETHLend.

Regulatory Perspective with SEC ruling

With your past expereince of the Internet of Things (IOT) and blockchain projects we are asking for your enlightment from a regulatory perspective with today’s SEC ruling, concluding that blockchain tokens sold through token sales are securities?

Firstly, the ruling is unprecedented in the blockchain space and I believe other jurisdictions will now seriously consider their regulatory stance and a course of action in the coming months. While it was commonly known that ICOs are on the radar of SEC, no one was aware how things will play out until the announcement from SEC.

In order to answer the question, it is important to understand how is a security determined. While there is no single legal test to determine a security, Howey Test is the most dominant test. Considering this test, a token will be considered an investment security for a token holder if the token holder’s money is under the management and control of others with the expectation of profits. Another test to determine whether tokens are securities is the resemblance test. Considering this test, a token will be considered an investment security for token holders if the token has properties like other securities such as bonds, stocks etc.

How will this ruling have an impact and effect on all Initial Coin Offerings (ICOs) or token sales?

There are two sides to every coin (token). ICO Scams are going to become extremely challenging to execute wherein scammers have been exploiting the unregulated ICO space in the past. On the other hand legitimate ICOs in U.S. will be temporarily slowed down in order to comply with U.S. federal securities laws.

Will this ruling impact U.S.-based projects as well as foreign-based projects wishing to obtain investment or funding from U.S.-based investors?

There will be impact on both local U.S. based projects as well as foreign based projects. The U.S based projects will be required to comply with U.S. federal securities laws while any foreign based project raising investments from U.S. will be required to comply as well. In my opinion most ICOs will avoid inviting U.S. residents to participate in crowdsales to avoid compliance with U.S. federal securities laws.

Is this also an opportunity for new entities such as CoinList (along with its partner AngelList) and SmithandCrown that have spent a lot of time and money streamlining the process of connecting ICOs with accredited investors “by the book.” ?

The ruling has certainly created a window for innovation in raising capital. We may potentially observe more traction from traditional accredited investors coming on board to invest in ICOs. I believe that this action will provide an opportunity for Blockchain to become even more mainstream than before.

Will this ruling slow the pace of innovation? Can you tell us from a global perspective?

I think the global growth of innovation will maintain its pace because SEC ruling only affects capital raising from and in the U.S. In my opinion blockchain technology is one of the biggest global disruptive technology of our times and SEC ruling will slightly adjust its path but will certainly not define or alter its path.

Value and Reward for People

Will building the decentralized applications of the next Internet give people more privacy, more security, more interoperability and reward them for the value they create?

While most of decentralized applications on the next Internet promise a vision to deliver privacy, more security and interoperability, these will be riddled with initial challenges like all developing technologies. I am certain that value and reward for people will be created in the long term after the stability and maturity of blockchain.

Token Crowdsale Model

ETHLend will be conducting an Intial Coin Offering offering through a token crowdsale this autumn. What in your opinion do you think of the token crowdsale model as a way to raise capital for innovation and companies such as ETHLend?

Token crowdsale model is gaining traction globally with a number of startups raising millions of dollars in a matter of hours (One such example is Bancor). This portrays public confidence and interest in crowdsales. In my opinion crowdsales complement the traditional ways of raising funds and enhance ease of trade, flexibility and liquidity for crowdsale participants. However, crowdsale participants must perform due diligence and market research in companies before investing or bear the risk. The crowdsale model is a dynamic model and provides an opportunity for ETHLend to build a decentralized application funded by the community, governed by the community, for the benefit of the community.

Lending Can Essentially Revolutionize the Lending Industry

How does ETHLends innovation on Peer to Peer Lending demonstrate a change to the way Lending is conducted from a blockchain perspective to solve problems for people?

Peer to Peer lending is not a global mainstream activity at the moment. Use of technology such as blockchain with decentralized attribute along with access to peer to lending can essentially revolutionize the lending industry. With ETHLend people will benefit from and will have access to:

·        Global lending without borders

·        Competitive interest rates

·        24/7 access flexibility

·        No paperwork

·        Transparency

and most importantly avoid discrimination from traditional credit scores.

Thanks Adnan for your insight on the challenging aspects as well as the benefits ETHLend provides to many people around the globe.

Kelly Ann is a radio co-host & market maker in the crypto space and currently works with projects in & on the blockchain limited to decentralization. Kelly Ann is also ETHLends Social Media Correspondent.

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Author: Kelly Ann @smospider

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