Blockchain evangelists annoy me.
Not because the technology isn’t cool. It is. But because they so often speak in overly excited, irrational fervor that makes more of it than it is. It reminds me of how people refer to the “cloud” when discussing online data storage.
► Blockchain will no more replace transfer agents than a next generation forklift will replace Walmart.
What is the “cloud”? A bunch of computers sitting in a datacenter running software that distributes data. Want your own cloud? Buy some computers, install VMware on them and connect them to the internet. Voila, you have a cloud. Nothing mysterious.
What is “blockchain”? A ledgering system for calculating who-owns-what. Transfer agents, banks, auction houses, escrow agents, trust companies, accountants and just about everyone else have been using a two-column ledgering system that was made popular by the Medici’s in the 1400’s. It worked great when you only had paper & pencil. In the digital age we can advance to a one-to-one ledgering system. blockchain is a tool. It’s math. It’s not mysterious and certainly doesn’t replace the people who use the tools.
Transfer Agents: keep track of a company’s investors, process communications to those investors, handle payments from the company to their investors, enforce transfer restrictions if an investor wants to sell, ensure good delivery to someone buying another person’s securities, retain all historical records and data of transactions, process stock splits, handle option tracking, process executions or warrants and options, and much more. Although most old line transfer agents today are archaic beasts chasing a shrinking market (there are 50% fewer public co’s today than there were 15 years ago, and 15 years from now there will be fewer still), there is a next generation of transfer agents like FundAmerica Stock Transfer (www.registeredtransferagent.com) who are providing services to both private and public companies and enabling investors to have choices in how and where they hold their securities, and in how the companies engage and interact with them. Those transfer agents will embrace blockchain to provide services.
So, is blockchain cool new technology? Yes, absolutely. Will it replace transfer agents? No.
► It will, however, enable a next generation of transfer agents to do some amazing things for the market.