The meteoric rise of cryptocurrencies throughout 2017 and 2018 captured the attention of the mainstream, as ICOs raised billions of seed capital in mere minutes and speculation on the future of bitcoin reached a fever pitch. As cryptocurrencies rose in popularity, the past two years marked many people's first introduction to the novel technology that emerged out of cyberpunk circles less than a decade before.
For Trevor Koverko, founder of the securities token platform Polymath, this introduction started much earlier. Koverko caught the cryptocurrency bug just as these technologies were emerging, and--after a circuitous career trajectory as a former draft pick in the NHL--he's never looked back.
"As a tech guy, I was excited about bitcoins' potential as 'programmable money'," Koverko says. "It could do what legacy currency couldn't do. It was free, apolitical, [and] had a mysterious founder who to this day has not been identified... Before I knew it, I was falling down the crypto rabbit hole."
Since then, Koverko has gone on to create Polymath, one of the first projects globally to propose the concept of security tokens. The compliance - focused platform is backed by a $59 million private placement fundraise from some of crypto's most prominent investors. It enables trillions of dollars of securities to migrate to the blockchain benefitting from 24/7 market trading, programmable equity, and access to $2 billion of unbanked wealth.
"The best kept secret in crypto right now is the rise of compliant security tokens," Koverko says. Here's how Polymath is leading the charge.
An Unusual Path to Crypto
Many prominent crypto leaders can relate to Koverko's early enthusiasm for a breakthrough technology that seemingly came out of nowhere. Yet Koverko's journey to crypto was more nuanced than that of many of his peers. Rather than starting out as a tech entrepreneur, Koverko's career began in the world of professional hockey.
Drafted by the New York Rangers in the 2005 NHL entry draft, Koverko's work was decidedly unrelated to the world of cryptocurrency--before a near-fatal car accident in 2011 upended his life.
"In 2011, I was in a serious car accident," Koversko says. "I was hit by a fully loaded transport truck and suffered a permanent brain injury with temporary paralysis on the left side of my body. Coming from hockey I was used to big hits, but this was on another level!"
After spending time in intensive care, Koverko was diagnosed with a catastrophic brain injury that would leave him with a permanent disability. "It took me a whole year to feel like myself again," he says.
During that year, Koverko came to terms with the fact that he would no longer be able to play hockey. That's when he decided to dive headfirst into entrepreneurship.
"I had to find a new purpose that fit with my relentless nature," he says. "And that started my new career as an entrepreneur."
The Emergence of Security Tokens
Koverko's professional immersion into the world of cryptocurrencies began in Asia, where he launched a slew of startups including eProf, Skyline Capital, and Digital Assets Intrntl. In the process, he learned how to build and scale companies on a tight budget and honed his skills as a startup founder while making a name for himself in the fledgling cryptocurrency space.
But it wasn't until 2017 that Koverko had his first breakthrough idea. "At the time, I was running a small private equity fund with the proceeds from my previous startup exits," he says. "I woke up one morning in the middle of summer and thought, 'Wouldn't it be great if my portfolio of crypto coins I had amassed over the years paid me a dividend?'"
With that vision in mind, Koverko set out to tokenize his fund and pay LP distributions via crypto instead of cash.
But Koverko quickly came to learn that his "breakthrough" idea wasn't all that innovative after all. "Dozens of projects had already attempted to tokenize financial assets, but most failed because it was agonizingly hard navigating the complex technical and legal challenges of launching securities on the blockchain," he says.
So Koverko did what any entrepreneur worth their salt does in the face of a dead end: He pivoted. In the process, he began to craft a much larger vision. As he puts it, "Why launch a tokenized micro fund, when I can build a platform that can launch thousands of them?"
And thus Polymath was born.
Today, the platform enables the use of security tokens, or crypto coins that are backed by real-world assets and comply with legal regulations around token creation. These unique tokens represent complete or partial ownership of an asset (like shares in a company) and restrict token transfers to verified investors. They live on the blockchain and offer several key native features, such as instant settlement trades, 24/7 liquidity, and tools to help comply with global securities laws--and they've been touted as the next megatrend in crypto.
While still in its early stages, the security token industry boasts several promising developments. These include Polymath's ST-20 token standard and its rapidly evolving developer's portal, which empowers developers to work with security tokens--thus growing and normalizing their use.
"As Polymath continues to focus on building necessary infrastructure for our industry to flourish, 2019 is poised to be the year when security tokens finally emerge," Koverko says. "Almost every day I'm seeing exciting progress, like new project approvals and compliant token issuances... l'd estimate the market cap of security tokens was up 10 [times] last year, while the rest of the crypto market was down 90%. I strongly believe that this megatrend will continue."
Building a Compliant Framework
The security token ecosystem involves many layers of stakeholders, from legal compliance to cryptomining protections and institutional investors. To navigate this complex network, Koverko places a strong emphasis on collaboration.
"Community building and teamwork is our top priority at Polymath," he says. "If we want to build a more open and transparent Wall Street, we have to work together. There is an enormous amount of work in front of us."
Legal and economic innovation takes time, but Koverko is pleased with the progress so far on the regulatory front. "I think it's important to admit that the regulators have done a really good job," he says. "They have threaded the needle between protecting retail investors and allowing innovation, which isn't easy and deserves a lot of credit."
As for the competition ramping up in the security token landscape, Koverko firmly believes in the sustainability of Polymath's value proposition.
"Polymath's mission is to dramatically lower the barriers for everyday issuers to launch a compliant security token," he says. "Everything on Polymath is simple and intuitive, something that has been sorely missing [from] the broader blockchain ecosystem." Prior to Polymath's founding, Koverko says, "It was almost impossible to launch a compliant security token offering, and you had to build it on Ethereum, risking non-compliance. That's what got a lot of folks curious about Polymath."
As 2019 begins, Koverko and his team are gearing up for a year of massive growth in the security token sector. The company's focus will be on attracting more developers and building out the ERC-1400 standard to facilitate security token standardization, among other initiatives. With Koverko at the helm, Polymath is poised to lead the charge into yet another new era of cryptocurrency.