Watchdog Capital Mulls Crypto Platform10.31.2019 By Rob Daly Editor-at-Large
Watchdog Capital sees a future where distributed ledgers using blockchains will replace and streamline many of the inefficiencies in global capital markets. A distributed ledger enables items of value to move without the need of a trusted third party to verify what is true. Watchdog believes that this technology will transform global capital markets.
The firm is approved for securities underwriting, investment banking, crowdfunding, Reg A+ offerings, REITs and various OTC, retail and institutional business such as directed brokerage. The decentralized platform will allow firms and individuals who meet a strict compliance screening process to affiliate with Watchdog and access its technical and operational capabilities. The firm is focused on the intersection of digital and traditional assets.
Rather than attempting to avoid, fight or bend securities regulations, Watchdog is fully SEC-registered and regulated in the United States. The firm intends to build a platform that is compliant with regulations while also embracing new technology. The firm believes that compliance with securities regulations can be compatible with decentralized and distributed technology.
“Many of the ideals from the Bitcoin industry can benefit the securities industry. Cypherpunks write code to protect consumers and their privacy and to give them more control over their digital lives. This isn’t at odds with the pro-free market ideals of the U.S. stock markets, in fact, it can be very complimentary. Watchdog believes in cypherpunk values, privacy, personal property rights, Austrian economics, security and Bitcoin as global money. The firm will work to push the limits of this technology as the digital securities ecosystem evolves,” said Bruce Fenton, CEO of Chainstone Labs, owner of Watchdog Capital.
Core to its mission is using the technology of Bitcoin and other blockchains to modernize the securities markets. “Watchdog is particularly interested in the future of technologies like decentralized exchanges, cross-chain atomic swaps, the Lighting network and privacy tools for digital assets. This is an ever-evolving area and the team believes we can merge the best of decentralized technology and its core values in a regulated environment,” said Fenton. Many developments in securities technology are at an early or experimental stage and not yet ready for consumers. Watchdog aims to be at the forefront as these technologies develop.
“We’ve been building for some time and Chainstone has been quietly working on constructing an industry best practices model for securities technology. Watchdog is both very conservative and traditional regarding compliance but also embracing the latest developments in technology.”
The decentralized broker-dealer platform allows independently owned startups and existing independent advisors and companies to affiliate with Watchdog under their supervisory umbrella, avoiding the need to start their own broker-dealer. Affiliated firms and individuals will work in a decentralized and distributed supervisory model with Watchdog Capital providing back office, technology and compliance support. The process includes extensive approval, licensing and oversight requirements.
Currently, the firm’s services are only open to select high net worth investors and through partnerships and affiliations. As the industry and regulatory environment mature, the firm plans to expand offerings. Any purchases, sales, and offerings will go through a rigorous compliance approval process. The firm is an open platform and will focus on SEC-registered and regulated offerings.
“If startups, existing firms or individuals with a spotless compliance record have the need for a broker-dealer or would like to explore affiliation with our decentralized broker-dealer network, we’d love to talk. Our focus is to build a regulatory compliant firm that is at the cutting edge of developments in the cryptocurrency and digital assets space,” said Carl Litsch, Director and Chief Compliance Officer of Watchdog. “In addition to Bitcoin, Watchdog is working to support SEC-compliant, regulated securities projects built on Ethereum and other platforms. This will evolve as we gain confidence in the ability of each toolset to comply with securities regulations and we see offerings that meet our rigorous screening process.” The firm does not plan to custody digital assets and intends to focus on a methodical and regulatory focused rollout.
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