An inclusive marketplace for all investor categories
August 27th, 2020
Cashlink: Hello, Max. We are very pleased that you are a guest in our interview series as CEO of area2invest. In case our readers don’t know the company yet, why don’t you introduce it first.
Max Heinzle: We offer a multi-asset and multi-product marketplace for traditional and tokenised issuances that connects non-professional, professional and institutional investors with issuers. On area2invest investors have access to a 360-degree product portfolio. This allows them to invest independently and directly in various asset and product classes via the ‘Online Shop for Financial Products’. On the marketplace, issuers get direct access to investors and can thus expand their placement reach and investor pool internationally. As a tied agent of Bank Frick & Co. KG, we are glad to have a strong partner at our side. Furthermore, we are building on our strong network of banks, brokers, asset and fund managers.
Cashlink: Where did the desire to create an ‘online shop’ for financial products come from?
Max Heinzle: We have been able to observe for some years now that the financial world is in a state of upheaval. One of the reasons for this is that the ‘bank’ business model is strongly influenced by changing customer requirements due to digitization on the one hand, but also by increasing regulatory requirements on the other. As a result, the financial world is gradually opening up to digital solutions, but in a fully regulated environment. Using the example of asset management, we have specifically observed that self-determination, flexibility and depth of choice are becoming increasingly important. This led to the idea of the area2invest digital marketplace: On the platform, investors gain access to a 360-degree product portfolio and can invest independently and directly online in various asset and product classes. In this way they can build up a diversified portfolio. The special feature is that we offer both securitised and tokenised securities on our online shop for financial products and this for every category of investor – be it non-professional, professional or institutional investors. Issuers and investors meet on area2invest without unnecessary detours and in compliance with all legal regulations.
Cashlink: area2Invest is based in Liechtenstein. Are there any geographical or strategic advantages here?
Max Heinzle: We identified Liechtenstein as a financial center early on. On the one hand, the Principality of Liechtenstein is regarded as a pioneer in blockchain technology, particularly through the TVTG Act (also known as the Blockchain Act), which was passed this year and defines clear roles for the players in the economy. On the other hand, Liechtenstein is a member of the EEA, which from a financial point of view brings some location advantages not only for us but also for our clients.
Cashlink: Recently you published your cooperation with Palmtrip GmbH and added the PALM Token to your assets, which is also the first financial product aimed specifically towards private investors. What opportunities do you see here for the Security Token market?
Max Heinzle: With the license for the crypto-custody business in Germany, we are just at the beginning of the age of digital values. However, we can see that there is a lot going on in the market, e.g. with a large number of banks and financial intermediaries implementing custody or sales/distribution solutions in their business. At the end of the day, a clear legal framework must be created throughout the EEA to ensure that the issue gains market relevance. Liechtenstein is already one step ahead of other countries with the Blockchain Act. However, I am also pleased to see that there is a lot of movement in Germany, especially due to the recently proposed bill for virtual securities by the Federal Government. So much is in the hands of the regulators and despite all the uncertainty, I am convinced that the security token market is only at the beginning of a promising development.
With area2invest, we are trying to connect this ‘new world’ in the investment sector with the ‘old world’ and therefore offer not only tokenised but also securities-based financial products on our marketplace.
Cashlink: Can you explain in more detail how your company distinguishes private investors from professional investors?
Max Heinzle: Depending on whether they are private customers, unregulated (e.g. sole proprietorships) or supervised companies (e.g. financial intermediaries), there are differences in onboarding and the availability of financial products in our marketplace. Private clients and unregulated companies have the highest need for protection and are classified as non-professional investors by default. They have access to retail products that are authorised for distribution in their country of residence. When activating their area2invest account, investors must enter contact details, identity details and account, custody account and wallet connection. Investors can choose whether they wish to provide a limited or extended self-disclosure. The extended self-disclosure includes a few questions about the investor profile, knowledge and experience. Provided that non-professional investors meet the criteria required by law, they can use the digital opt-in procedure at the end of the self-disclosure and at their own request and arrange to be upgraded to a professional investor. The product range will then be extended for these investors. The situation is different for professional and institutional investors. They have direct access to the retail products and those that are aimed at this target group.
Cashlink: In addition to the tokenization of real estate, new asset classes are coming onto the market almost daily – from ships to trees, the possibilities are endless. Where do you see the greatest potential and what kinds are particularly interesting for your platform?
Max Heinzle: area2invest is characterised as a multi-asset and multi-product marketplace for both traditional and tokenised securities. The creativity in the field of alternative asset classes has been unlimited, especially since the invention of the tokenised market, and has taken on partly exotic forms in financial product design. Ultimately, it is the quality of the financial products and the associated demand for them that is decisive. We are optimistic that investors will be offered new types of financial products in the future, and the revolution brought about by tokenisation has only given us a foretaste of what is to come.
Cashlink: And lastly, we want to know your perspective of the future: How do you think the marketplace should look like in 10 years? What is still missing to get there?
Max Heinzle: Our goal is to continuously expand our product range for professional and non-professional investors in the DACHLI area as well as in the EU with exciting and innovative products. From a technical point of view, we would also like to continue to optimise our portal in order to provide our users with a simple and intuitive operation. In the long term, we have set ourselves the goal of becoming THE online marketplace for tokenised and securities-based assets and products in Europe and to disrupt the way people invest. We are very optimistic about the future, especially since we in Europe are still in the early stages of adopting technology in the financial world, considering how banks are still operated technologically today.