Future of Finance


A transfer agent fit for the coming age of tokenisation

1transfer describes itself as the “first transfer agent for the digital world,” by which the founders mean the emerging universe of security tokens.

Though it is a consortium venture embracing seven firms in broker-dealing, automated trading, crypto-currency and FinTech, 1transfer is very obviously the brainchild of Houston-headquartered Entoro. The entire raison d’etre of the investment bank is to exploit the accelerating convergence between investment banking, private securities placement, trading and market making, wealth management, crypto-currencies and security tokens. In the light of that strategy, reinventing transfer agency makes perfect sense. Future of Finance co-founder Dominic Hobson spoke to Entoro founder and managing partner Jim Row about where 1transfer came from and where it is going.

Questions being asked

1.       Transfer agency is usually cited as an early victim of widespread use of blockchain technology because of what they do: keep a record of securities issued (that’s on the distributed ledger), record changes of ownership (that’s also on the distributed ledger) and distribute dividends (smart contracts can do this using the current shareholder list on the distributed ledger). What persuaded you that idea is wrong?

2.       1Transfer describes itself as the “first transfer agent for the digital world,” which implies you will support security tokens (presumably a transfer agency function is irrelevant to crypto-currencies). Is that the primary focus?

3.       Your firm has tokenized private assets, as opposed to talking about it. What did you learn from that experience about the value of a transfer agent? 

4.       Most tokenization projects are now aimed at privately managed assets. Is that your focus also?

5.       Is absorbing traditional securities in issue part of the (long term) strategy of the firm?

6.        Are mutual funds also on your target list?

7.       What will 1Transfer actually do as a transfer agent to issuers of security tokens (i. e. its actual functions, such as making income payments)?

8.       How will 1Transfer interact with the smart contracts written into the security tokens?

9.       Is there a role for 1Transfer to track the physical or escrowed assets underpinning security tokens – or is that a custodial function you won’t be performing?

10.   What technology are you planning to use?

11.   Transfer agency is a notoriously un-automated and manual business, and improving it will depend on seamless data flows. Does that imply agreement on data standards, computer protocols and standardised APIs (and, if so, how do you bring that about)?

12.    Are smart contract token standards such as ERC-20 helpful?

13.   Who do you need to sell the service too – issuers, obviously, but do intermediaries (such as distributors or[platforms) and investors need to buy in as well?

14.   Are network effects important to the success of 1Transfer?

15.   Why on earth did you want a transfer agent business?

16.   What sort of future do you envisage for conventional transfer agents?