How artificial intelligence, STOs, decentralization, and financial inclusion will drive the future of investment

Experience is the best teacher. This can be said for virtually all aspects of life, and it is especially true in the world of entrepreneurship. True entrepreneurs know the value of experience – even failures can contribute to bigger successes in the future. Each stumbling block, each hurdle, can be a stepping stone to better skills, better capabilities, and better decision-making processes on the way to the top.

Aaron Tsai, Founder and Chief Capitalist at MAS Capital and MASEx, is no stranger to entrepreneurial ventures and experiences. While he is known to have pioneered some innovative platforms for investing in securities today, it’s perhaps more interesting to learn about his journey – failures and challenges included – since he started in the technology scene in the early 1990s.

Lessons learned from dot-com boom and bust

Tsai attended the NYU Leonard N. Stern School of Business from 1988 to 1990, and it was during the dot-com boom when he entered the tech scene by launching two companies in Silicon Valley: American Multimedia, Inc., and Multi Access Systems, Inc. or “MAS”. Tsai also acquired notebook computer company ACOM through reverse-merger via Aimex International Corp., a public shell company.

There were several innovations here that were ahead of their time. MAS was built as a TV-based operating system designed to compete with PC-based OSes like Microsoft Windows — analogous to today’s AppleTV or Android TV boxes.  

ACOM went bankrupt during an IPO attempt, however. And as with many dotcom companies, American Multimedia and MAS also failed.

Tsai’s experience with innovating and with acquisitions through shell companies led him to his next set of ventures, notably as a successful Wall Street investment banker. He launched MAS Capital, Inc. as a holdings company, which operated MAS Capital Securities, Inc., an SEC-registered security broker and dealer.

Interestingly, Tsai’s first Nasdaq IPO success came after the dotcom bubble burst, when the Nasdaq Composite Index crashed from a high of 5408 to a low of 1400s. In June 2002, he completed a US$10.5 million IPO for BioDelivery Sciences (Nasdaq: BDSI), which merged with MAS Acquisition XXII Corp., a public shell company that Tsai created. This was done by securing an IPO underwriter and participating in IPO roadshows, while the company was pre-revenue with only patent rights to a new drug delivery technology.

Thus, Tsai had mastered the art and science of establishing public shell companies and taking private companies public through this structure — 101 public shell companies in total, earning him the moniker “King of Shells”.

Enter the world of digital assets as security

Deep insights into securities encouraged Tsai founded MAS Capital Group, Inc., as a financial advisory business, managed by a team of financial professionals in Asia.

The years 2017 and 2018 had been a turning point for entire industries, as digital token offerings were bringing a lot of value to businesses crowdfunding for their capital. Billions of dollars worth in digital currency were invested into Initial Coin Offerings (ICOs) during this time, although there was a gap in terms of how investors did due diligence on businesses raising capital — and vice versa.

Thus, further innovation was necessary, and it was in August 2018 when Tsai formed MASEx, a global Security Token Offering (STO) exchange, with a registered representative in Taipei. 

STOs differ from ICOs, in that STOs involve regulatory compliance and are subject to due diligence and regulatory checks — thus allaying investor and regulator concerns over potentially dubious projects.

Luisa Fernanda Agudelo Blandón, Marketing and Communications Manager at tokenization platform and FinTech consulting firm Micobo, says STOs will open bigger capital resources through disruptive and innovative tools. “Unlike ICOs, STOs represent a fully compliant alternative to capital growth and asset liquidity. They are securities (financial assets) stored on blockchain/decentralized ledgers, supported by an underlying asset that holds monetary value in the real world.”

Disrupting finance through artificial intelligence and decentralization

At a keynote speech at the Security Token Summit in Los Angeles in April 2019, Tsai called for an urgent decentralization and regulation of STOs. “We are going through a seismic shift that extends across the entire financial industry. This will disrupt the existing oligopoly of financial institutions in banking, securities and fund management sectors. Regulators must rise to the occasion,” he stressed.

This decentralization will also involve a geographic shift in financial power. “As we enter a new decade, do not be surprised to see the largest STO exchange in the world based in Asia or China,” Tsai added.

Better financial inclusion through the decentralized approach

MASEx went live in November 2019 with plans to further innovate by using artificial intelligence and blockchain technologies to form a decentralized exchange to trade securities, commodities, FOREX and digital assets on a universal trading platform.

In February 2020, the company announced its investment into TTChain, which subsequently became a subsidiary, and which will provide the technology to power lightning digital asset transfers for MASEx.

TTChain is a global service provider for decentralized blockchain and cross-chain lightning transaction ecosystems, and it will solve several key challenges of digital asset exchanges and public blockchains, including slow transaction speeds, high handling fees, insecurity due to over-centralized exchanges, and the inability to exchange digital assets across different  blockchain protocols. The solution will provide the technical infrastructure to the MASEx platform, through its experienced team led by CTO Simon Hsu, who formerly worked at Microsoft.

MASEx plans to empower investors and capitalists through Security Tokens through the following features: cross-border mobility, ease of investor access, fractional ownership, and financial inclusion for the unbanked. STOs will also provide enhanced secondary-market liquidity.

MASEx will feature several listing boards: the Universal Board, Premier Board, Venture Board, and Entry Board. 

The Universal Board will adopt AI-based continuous due diligence on companies with a monthly reporting standard, which will be achieved by using cloud-based internal controls and accounting systems. A monthly report, U.S. or International GAAP audit, and annual report will be required. The Premier, Venture, and Entry Boards are targeted at businesses requiring lower levels of compliance, respectively.

MASEx’s compliance strategy involves the use of smart tokens, such as Ethereum Security Token Standard – ERC-1400. Security token issuance compliance platform will be through strategic partners to cover global investors. This is one of the key advantages of STOs wherein cross-border investments become more frictionless compared to traditional securities investments.

MASEx also plans to engage emerging economies by enabling unbanked and underbanked populations to participate in its AI-driven decentralized financial system through tokenized transactions. This includes purchase of single- or multi-fiat based stablecoins, tokenized REITs, equity and debt mutual funds, index funds, and other security instruments, among others.

STOs are the future of the decentralized crowdfunding industry, and tools like MASEx’ AI-driven platform will be part of this trend. 

Micobo’s Agudelo concludes: “There is no doubt that the token economy has great potential and will open bigger capital sources that remained locked today, delivering the efficiency and accessibility that digitalization requires. Hence, as usual for disruptive and innovative tools, it must overcome some hurdles to become the norm.”

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