Q&A with Hadley Barrett of ReMoneta Group

Barrett: As more professional investors start to look at the market, they have different criteria for investing than the easy-money crowd. This is the traditional model. For instance, they look for real businesses, real cashflows, great, experienced teams and solid models, rather than blue-sky ideas. This benefits the market. It means we will have more successful businesses instead of the 95% failure rate quoted.

We recently had the opportunity to ask Hadley Barrett, the owner of ReMoneta Group, a few questions about the current state of the crypto economy and what he thinks the future holds.

The following interview reflects the views of the subject and should not be taken as investment advice.

ICOs and STOs

Cointelligence: Do you think that the ICO model, as it stands today, is relevant at all?

Hadley Barrett: The old ICO model is dead as long as there is no easy money from speculation in bitcoin, ethereum and similar tokens. During the peak of speculation in 2017, many people in crypto received money through speculation. New people joined the market encouraged by the “make money fast” reporting frenzy and also spent some of that that money quickly, partly on ICOs. The frenzy-buying has not been happening for a while now, since general token prices are not going up.

At the same time, the market has matured a lot. As more professional investors start to look at the market, they have different criteria for investing than the easy-money crowd. This is the traditional model. For instance, they look for real businesses, real cashflows, great, experienced teams and solid models, rather than blue-sky ideas. This benefits the market. It means we will have more successful businesses instead of the 95% failure rate quoted. There is a reason the traditional model has worked for so many years. In addition, regulation is increasing, scammers are being cracked down on and dodgy deals being investigated. Easy-money investors have a lost a lot of their easy money and so they are more cautious. Altogether, the businesses out there will become stronger because of it and the rest will close.

However, we have many regulated markets already, many restrictions and limits on what, where and when we can do things. The ICO market is not very large at all compared to the wider economy and so its impact is minimal. Therefore, why not have one completely unregulated market, separated from others, where anything goes? Caveat emptor – let the buyer beware. The old ICO model has shown us there is demand for minimal regulation, simple sales information, and freedom of action. We just need to be sure there is a warning label, so people know this is what they are getting into.


Cointelligence: In the current state of the market, who are the winners and who are the losers?

Hadley Barrett: The winners are definitely the professionals. Serious companies with a real business model, cashflow, and a great team. These companies will always be valued.

The losers are the teams with blue sky ideas, little real world experience, scammers, existing zombie companies (those who have no real business model outside crypto or companies who raised funds last year in crypto and have seen the value of BTC, ETH, and so on tumble not leaving enough money for their development), and overpriced service companies. Prices are already falling dramatically and that is also good for the market.

Cointelligence: Are STOs just a new hype or are they here to stay? All of the big exchanges have already announced that they are going to allow security tokens to be traded on their platforms, but is it really going to happen?  Are they suitable for trading?

Hadley Barrett: Security tokens are here to stay as long as there is a financial benefit to them, eg. where they have lower costs than existing markets or generate new income streams. Stock exchanges are nothing new, nor is listing assets (which you can do quickly on some traditional exchanges). So what is the benefit from using a token exchange rather than just listing a fund, shares, or other structure which can be done relatively efficiently today (for say 50,000 -100,000 Euro)?

There is little point in STOs which are just “funds on blockchain”. The liquidity of existing traditional exchanges is much better, more structured, there is more money, and there is a huge range of financial instruments available.

So, the blockchain exchanges and products need to be cheaper, simpler, or something unique.

As an example, we have created a number of products based on a unique zero-cost platform. Take the case of ReMoneta LAND, one of our products. This is a currency 100% backed by land. We have worked out a particular structure where, under the current regulations in Europe, it is lower cost, has zero entry/exit costs, is liquid and tradable, generates a solid income for buyers in excess of equivalent alternatives, and can be used to buy goods and services as well as other unique features. Compared to alternative currencies, REITs, or funds it is superior. So, this provides lower cost (disruption) as well as some unique client-valuable features that cannot be found elsewhere in the traditional market. Products like this have a real business case.

Cointelligence: Which models do you think will be successful for STOs? Equity Tokens that give you voting rights, or Utility Tokens with Security Features?

Hadley Barrett: We will see different structures emerging which can be used in their own niche area, however, the questions in each case is: what benefits are there? Why have an equity token rather than just issuing equity? Today its easy and low cost to set up a company and sell its shares.

Quality assets are always in demand, so tokens backed by assets have potential, but they need to be priced at their real value and have lower cost or more valuable features than their non-blockchain equivalents.

The most interesting option is the possibility for asset owners is to create a holistic product, backed by their asset, which generates higher value than the asset itself. We have been working on this already since 2017, before security tokens became fashionable.

In our case, ReMoneta is a platform backed by land. The land gives value and stable income to the platform, allowing a continually funded zero-cost payment ecology to exist. Building on the platform functionality we are able to create a conveyor belt of unique disruptive products each with venture capital level returns. We have the return from the land and on top of the platform, each product could generate 100%+ yearly returns. By combining real estate, finance, and technology, our land asset has thus multiplied its value many many times.

Funding and liquidity

Cointelligence: What do you think about tokenized VC funds? Why haven’t many VCs done it so far?

Hadley Barrett: A little while ago, people were saying “everything will be tokenised”. This was the same as trying to make blockchain code do everything - a pure solution, only distributed, only blockchain, no traditional centralised coding or systems even when it was better to do it off-chain. That’s like trying to bang a square peg into a round hole. Unless there is a clear benefit for a VC fund to undertake the additional work of creating a tokenised fund, it will not happen.

Cointelligence: Can crypto find its place as an alternative liquidity instrument?

Hadley Barrett: It's possible that there has been enough momentum so that tokens could become their own investment class. However, since tokens are all very different it could be hard to classify and place them in a portfolio. Certainly, an ultra-low regulation market where the “asset” is tokens would be interesting because it expands options for buyers. As far as liquidity goes, there is less money in the token market than traditional markets. I personally see the best direction as creating individual investment products which have additional features and cost savings compared to the traditional markets.

Cointelligence: Considering the fact that liquidity is one of the main perks of security tokens, would you build a short-term liquidity strategy like a hedge fund, or choose to remain long term investors like traditional VCs?

Hadley Barrett: Tokens have much less liquidity than exists in traditional markets and exchanges. Look at the liquidity on major stock markets, bond markets, money markets, inter alia, and compare to the biggest token exchanges. In addition, there are many existing financial instruments allowing assets to be made liquid. Therefore liquidity in itself this is not the best reason for assets to become tokenised.

The way token strategies and exchanges could win over traditional alternatives is cost-leadership and reduced regulation. Rushing to build a security token (or exchange) under traditional regulation and existing (or higher) cost structures is not a winning strategy.

Cointelligence: Investment in equity in comparison to investment in tokens: which is better and why? If someone were to offer both of them together would it be a problem?

Hadley Barrett: It depends on the goal of the investor. Some companies have been issuing both already for different purposes. Like equity/debt instruments, they both raise money based on different conditions and are useful for different types of investors.

A token can currently represent anything, which makes it flexible and quite interesting. The corollary of that is that it is difficult to define for any investment market. In fact with the right juridical setup, a token itself can represent equity and thus be the equivalent of an investment in equity.

As it stands today, probably all of the business world and beyond understands an equity investment (normally for a share in the company), while not many people really know about, trust, or understand tokens. Along with the fact that tokens have limited trading ability, that is one reason why there is a lot more money available for equity investments than token investments.

The main reason previously to go ICO was the ease of raising funds, particularly for very early-stage ideas. Now the market no longer supports this. So, in my mind there are two disruptive alternatives where the market could go – low cost/low regulation and/or creation of unique structures. Since many investment structures can be created already in existing markets, this is not so much about raising funds but more about a structure which enables something new, eg. the token is both an investment and an enabler to allow the company to do something (the classic example being a payment system – where the token is the investment and a part of the system for payment at the same time). This would be a token with both utility and security features. Of course, as above, the more complex any structure becomes, the more difficult to understand and thus more niche.

Cointelligence: What is the exit strategy for STOs? Some say VCs don’t want security tokens to be traded. What do you think?

Hadley Barrett: This question has been posed to us a number of times. Because we have been involved in real estate (as well as finance) for over 15 years and now a while in blockchain, we have been contacted by a number of real estate and finance companies asking how we can help them realise more value from their assets using technology. Of course we have already launched a number of alternative products with the blockchain, so, since the technology market is quite new, we have a comparatively large amount of experience in this area.

So far most people have been looking to try to sell their assets into the crypto market. This is an exit strategy in itself.

However, exiting from a new STO company will be the same as it always was. Go to the market, sell as a trade deal to a complimentary/competitive company, sell to a fund looking for cashflow, IPO/ICO etc. so it comes back to the first question above. You need to build a great, solid, repeatable, cashflow generating business with a valuable customer base (or a valuable asset portfolio). If you have that, you will have a buyer. If you don’t then it will be more difficult and you need to create something unique or strategically valuable for a particular buyer.

Cointelligence: Would the cost of issuing STOs be a barrier for startups?

Hadley Barrett: Issuing itself is not the main cost. At the moment, you can issue a token for a very small price. The cost is based on which traditional regulation you need to follow and the sales/promotional costs to generate demand for your token… in most cases since regulation is not yet fixed, if you want to be safe, the cost is the same as issuing any other comparable security, so there is no saving.

Also important is what can you can do with the token after you issue it. There is more limited liquidity than other markets and it is still difficult to list (legally).

However, I expect there will be various new and creative ideas, some of which will (partly) bypass existing regulation for other products. I expect the price on exchanges will drop to the floor and so listing costs will become cheap and even zero – I have received quite a few zero-cost listing offers recently. This is where STOs will beat the existing markets – low cost, simpler regulation, and/or more flexibility which the customer is demanding.

The question for anyone thinking about a new blockchain STO or other launch should be what are the benefits of this vs. traditional alternatives. While many companies will probably offer to help advise on this, there are very very few who have actually gone through both processes – longer term experience investing in, owning, and managing assets, and bringing new asset tokens to market (traditional and blockchain). Therefore, while “everyone is an expert” and will be happy to take your cash to advise you, there are very few who can give any real added value beyond their own niche specialism (law, finance, etc.). I would suggest approaching companies who have already done it for themselves successfully and see if they would be interested to also offer advisory services.




Thank you, Mr. Barrett, for taking the time to answer our questions!

Disclaimer: The content of this article reflects the views of the subject and should not be taken as investment advice.