Music courtesy of BlackIrisFilms.com

INTRO

Hey, folks, Andy here. Welcome to Unleashed with the Dacxi Chain, the podcast that features experts from within Dacxi and from across the industry who are here to share their insights on developments shaping the global technology scene, global crowdfunding, economy, blockchain, and much more. Today’s guest is Mr. James Wallace. He’s chair of Digital Markets, which is a platform that connects the world’s best assets with global investors through a network of digital securities exchanges, allowing issuers to quickly access the world’s capital at a fraction of the cost and providing investors, of course, with those exciting investment opportunities. Welcome to the show, James.

So I’d love it if you could maybe just expand on that, tell us a little bit about who you are and your professional journey, and the lead-up to getting involved with Digital Markets.

GUEST INTRO

I’m a serial tech entrepreneur. I’ve actually been building tech for actually almost 30 years now, and it was really a result of I opening a store when I was really young. I was 16 or 17, kind of bored in high school, and decided to bounce out and go do something and opened a store selling the only thing I knew at the time, which was video games, and then quickly realized that it was a horrifying experience being the retail environment because most humans turn into savages and realized that I just couldn’t persist. There was no path forward. There was no way for me to make this work. And so sitting there and sort of my quiet desperation, having sunk everything I had into this store, this would have been the early 90s. I started thinking about researching the internet, and effectively, you probably jumped ahead with me and tried to build an e-commerce platform. Frankly, unfortunately, about ten years before it was possible. There were no merchant payment providers, and there wasn’t even inventory management software, but I ended up with a glorified digital brochure for my physical inventory. But it really taught me the power of digital, of software, of what we call now Web2 and communications. And so I pushed everything I had, all my time and energy into trying to understand what it meant. Probably about two years later, I had to make a decision, a fork in the road. Do I want to become a programmer and focus on the technical side, or do I want to basically focus on the business side? And as an entrepreneur, I knew I identified as an entrepreneur when I was really young. I decided to focus on the business side and just hire and partner with really smart technological and technical people. And so, yeah, that’s really the genesis. And over the last 25 years have mostly had failures. I’ve had a couple of successes that have led to me having a bit of capital and a bit of advice as an executive and an angel and now VC, being able to put some capital and advice into other operations, other organizations, and startups that are looking to do big things in the world. And that really brings us to Digital, where we realize that obviously, the rise of crypto showed us that there’s an insatiable appetite for retail investment. And we think it’s more than just numbers. We actually think that people want to allocate their capital to things that matter. We think that people are seeing that the government is broken, their votes don’t matter at least as much as they did. And we think a lot of people are starved of meaning. This crypto sort of wave over the last seven or eight years has really been, I think, people trying to search for things that matter, and they found projects and people and they’ve allocated capital, which is what some people that’s all the sort of domain that they have is their money. And so Digital seeing that opportunity and wanting to bring what we call market rules, which is just fairness to that sort of growing ecosystem of innovators that are looking for capital, we realize that if we brought a little bit of sensibility, we could probably find innovators capital quicker. And so we think that the world’s biggest challenges can be solved through innovation. And moving the world forward positively really is just about getting capital to these people quicker. And on the other side, the buy side, the investor side, helping them to, again, as I said, feel domain and feel like they’re shaping the future.

ANDY’S COMMENTS 

Yeah, really exciting listening to your talk there, James. I can see there’s a lot of synergy between what Dacxi Chain is trying to do in the world and what you guys are doing at Digital as well. Dacxi Chain is all about building the world’s leading global crowdfunding ecosystem, but behind that, it’s all about connecting innovators with investors and empowering those innovators to bring their creative ideas to life. And of course, based on the premise, James, that innovation can come from anywhere, and while there are barriers to entry in various different markets and jurisdictions around the world, blockchain tokenization, is really beginning to enable that frictionless flow of finance and ultimately it’s just going to empower both innovators and investors all around the world. Right?

JAMES’S COMMENTS

That’s right. And what’s interesting is so early in this chat we got to something that we very rarely discuss and that is one of the core mandates of just driving capital to innovators. But as I said, it’s for that reason that we believe that a lot of the social good, the things that seem to want to become manifest and real in the world is going to be better, we think. Built and brought into the world by innovators in sort of a market scenario as opposed to maybe social programs and governments doing that work and also really addressing the reality, frankly. And again, I don’t ever try to be sensational for the purpose of being sensational but to make accurate statements. If they do sound a little bit salacious, it’s not my intention. But venture capital is predatory and investment banking is parasitic and venture capital really preys on the issuer side which beat them down. They’re the term sheets and sort of jump on the board and bully the founding team and replace the founders. And we know how that goes. So they’re extracting value from the issuer, from basically the seller of the security later in the market, and then on the buy side, we all know what the investment banks do. Ultimately, it dumps in the market after listing typically because most of the value has been extracted by them. But previous to that was the venture capital sort of a portion of that life cycle. And really a lot of founders and innovators, if you’re lucky enough to get venture capital, there’s this massive gap between your seed A, B, C, and then probably Series A-B and then the investment bank that’s going to take you public. Most people can’t cross that chasm. There’s no one there to navigate it. Why? Because it’s not profitable. And so it’s just really that sort of pitfall, that labyrinth that there’s no guidance, there’s no support. And at the same time, we’re demanding that these people go out and fix real-world problems. So they have to run a business full-time as founders, work 60, 70 hours a week, and then they have to spend 30-40 hours raising funds and managing investors and trying to navigate all of this. It really is not cleanly laid out by lawyers and accountants because frankly, they benefit from that predatory and parasitic nature. So again, obviously, we are wanting to drive capital into the innovator, but we’re also wanting them to focus on their business, to focus on solving those problems, and not spend time managing the extractors in that what we call capital markets lifecycle.

ANDY’S COMMENTS

So refreshing to hear you drop some truth bombs there, James. And I completely agree with your comments on the extractive and exploitation-based models, I suppose of both banking and VC. It really kind of reminds me of something I think you said at the beginning of the show, James. When it gets down to it, humans are savages. That’s kind of how the world works. But it’s up to us really to create models then that level the playing field, if you like, and are a bit fairer. So perhaps we can take some of that dark side of human nature out of the equation if that’s not getting too philosophical.

JAMES’S  COMMENTS

Not at all. I mean, actually, philosophy in my view is very practical because when we can align around core values and principles, we can actually move really fast. I can make assumptions about other people, I know what’s important, what their priorities are and their aversions, and frankly, what they don’t want around them and we can now formulate something very quickly. So I think philosophy is good for aligning interests and should we move forward together on this project? If I understand your priorities and they match mine, the answer is probably. And to that point, you make a very interesting point. I think there is a sociopath class in my view. I see it in finance, I see it in government. We work with governments all around the world, we work in a very highly regulated space. We are discussing lobbying, and modeling frameworks that require less onerous requirements, but there’s still going to be some regulation to make sure there are market rules. And we’re exposed to a lot of people that really are void in my view of not just morals and ethics, but sort of principles and the care, let’s just say care for other people, market participants, people around them. But I think a lot of people that are not that they probably are around, that they’re in venture capital firms and hedge funds and so on are operating and behaving badly probably because they don’t know the impact. And I talk a lot about this and have for years and I think it’s not to let anyone or anything off the hook. There’s something there to make known and to bring consequences to bad behavior. But it’s only fair I think, to sort of drive it through the filter of do they know what they’re doing, do they know the pain that they’re causing? And we talk a lot about looking in the crypto world and one of the reasons that we believe that there is no doubt that we need market rules is just looking at Terra Luna’s mirror, that implosion of $60 billion. Now obviously everyone’s talking about FTX. We do see that there’s a need for market rules and all that means is just fairness. When I enter the market, can I be assured that there isn’t market manipulation? Can I be assured that there aren’t people extracting value, not providing value, etc? We think that’s fair and that could probably be algorithmic and Oracle based in the future. I think humans are very bad analyzers and distributors of consequences. I think we need algorithms to do that. But setting that aside for a second, when we look at the amount of financial damage, money damage, a lot of people at venture capital firms and hedge funds are analysts, they are in spreadsheets, they’re looking at money, they’re looking at dollars, pardon me, they’re not looking at money in dollars, they’re looking at numbers. They’re forgetting that they’re dollars and they’re forgetting more importantly, what those dollars represent. These are people’s savings. Their kids’ university, the vacation fund, all those things that frankly bring joy into our lives. And when that is destroyed, that leads to belts of anxiety, depression, and some of the big issues in society like divorce, suicide, and homicide. These are real human consequences. So getting back to the point, and again, not to be overly philosophical, it’s not at all. That is an actual, very real consequence of bad actors in the global financial system, whether that’s banking or government use of taxpayer money or capital markets. We need to remove that bad actor component, which Blockchain does, incredibly, does it with money, does it with capital markets. You can do it with voting, obviously. You can do it with a registry and sort of supply chain stuff, but we can bring transparency and remove the bad actors. And again, we’re identifying, I think, that right now and paving a way to allow that removal of those things that is going to allow us to, I think, remake the world around us.

ANDY’S COMMENTS

Yes, wonderfully said, James and I very much agree. As we’ve said, Blockchain tokenization, we’re not quite there yet, but we’re heading in that direction. It’ll make capital markets more efficient, and more transparent, and that is really what Blockchain exists to do. Bitcoin was created to take trust out of the equation because I think, as we’ve kind of alluded to James, yeah, it’s difficult to trust humans that you don’t know. And well, blockchain exists to solve that problem. And just while we’re talking about those bad actors, refreshing to see that Sam Bankman Fried was arrested around 12 hours ago and does look like he is now going to face the full consequences of his actions, as he should.

JAMES’S COMMENTS

I was surprised it took them that long to do that, especially with all the fact that he testified in front of Congress and the political donations and so on. His involvement really in legacy and in governance is probably going to adversely affect him. And when we look and compare with a lot of other bad actors in crypto, how they still walk free as well, I think about Do Kwon and others actually. Really, actually to step back and connect what you just said just now and previous, and what I was saying is that excluding that sociopath class that really intends to extract, I think a lot of people are behaving slightly badly because they don’t know what they’re doing. And that idea of Blockchain, that pseudonymous transparency sort of, I think drives this nice sweet spot between privacy and activates awareness that when this happens, these other things happen and we don’t hide them behind this. If you look at capital markets, you have transfer agents and custodians and market makers, and then you have the exchange and you have all these various components that actually act to sort of remove people A from understanding and B from feeling any responsibility. Hey, I’m just doing that little thing over here. I extract that bit of money. I wasn’t really responsible for all this. Thinking about legacy HSBC banking, the Mexican cartel, and Lehman Brothers, the fraud that occurred there. Everyone can sort of has that plausible deniability of, oh, there’s a separation of concerns. I wasn’t the start and the end. I played a minor role and I did my job. Whereas I think, again, with blockchain we’re driving toward, there is incredibly this element of transparency that allows us, and again, when we drive and you talk about crowdfunding, that’s about disintermediating a pile of players, which is fantastic. And again, if it’s truly peer to peer and we talk in our world, because our world, which is full stock exchange listings, fully public, no restrictions on trading, we don’t see probably in the next five to ten years that there’s going to be a peer to peer possibility for at least global retail cross-jurisdictional trading. But we do see something close to it and we’re calling it near-peer. But the whole idea, again, is to drive the two people that create the value, the innovator and the capital contributor, to as close to direct as possible and remove all the other market participants that just frankly extract and distort, and to make sure that we have the cleanest transfer of value in both directions. And then we have this tiny layer of regulation just to make sure that the issuer and the seller of securities is a real person with a viable ongoing concern and is managing their operation responsibly. And again, on the buyer side, that this is a real person that’s not a terrorist or money-launderer, and then they should be able to transact. But again, to your point, I think that, or your last comment, I should say it is really good to see SBF brought in. I think there are a bunch of assumptions in all directions that are somewhere between wrong and right and probably a lot of stuff in the middle. And I think it’s just important for the entire world because now we’re driving crowdfunding platforms, crypto, and other sorts of direct participation. We have a lot of people in the world that can now directly participate in finance. And this is I think, we’ve underestimated the value of increasing people’s financial intelligence. Your attention goes where your money flows. If you put money into something, you’re going to start paying attention. People know so much about finance. They have a long way to go because we, I think, have been intentionally miseducated and non-educated on finance, so that we become sort of the liquidity, we become the spenders and the consumers and not sort of the capitalists. But I think there’s been a massive transformation. People are becoming educated and we’re very close with the Wall Street Bets team, the founders, and 17 million people that are calling out bad behavior. They’re informing themselves. They’re in dialogue all day long. Discussing different aspects of finance and so, yeah. We should have lots of conversations, he should provide all the evidence. And then a judge or a jury needs to determine if there’s criminal activity. But the entire world and those participants, especially direct FTX, deserve to know exactly what happened. And we as a community, a global community of probably tens of millions of retail investors, need to be able to harvest that learning and make sure that we don’t do it again.

ANDY’S COMMENTS

Absolutely. Thank you. James, so many threads I could pick up on there. I did love the quote. I don’t know if this is from you or something you’ve picked up along the way. I think you said something like, your attention goes where your money flows. I enjoyed that. You did explain it a little bit in there as well. But I think it’d be good just to give you the opportunity again, just to talk through how Digital works. Maybe explain a bit more, James, in terms of who the platform is really aimed at and who can access it, what the opportunities are, I suppose both on the innovator’s side, if you like, and of course, on the investor side.

JAMES’S COMMENTS

It took us about five years to build this. In the first three years, we focused strictly on compliance because we realized that if we didn’t have a platform that was safe and secure and not technologically from a regulatory and compliance standpoint, then ourselves, maybe especially because that’s very risky, as SBF is finding out, not operating a platform, it’s beyond compliance. But one of our predecessors, Exponential Ventures, was the Solicit investor in the world’s first federally approved digital security out of Bermuda in 2018. And that platform is fantastic. The Premier, Bert, the BMA, the Bermuda Monetary Authority, and the Ministry of Finance, they all want this equal access to digital assets, but also equity. Again, people, I think have the right to direct their money. And this notion of not of accredited, only getting access to frankly the most lucrative under the veil of investor protections we know is itself a fraud, in my view. I think that the intentions are good. Most people at regulators are good people and really, truly want to protect the investor. But what it’s created is, again, if I’m being somewhat sensational, effectively, what we have is a bunch of rich old white dudes as chairs at these venture capital funds that are directing tens of billions of dollars towards things that, if we’re just being not even honest about but objective about. There’s a worldview of this type of person and it doesn’t represent the world. And so these people are shaping the world as they see the world, and we need more people to participate in shaping the world. I’d rather have 3 billion people shape the world than 300 people. Bermuda opened up its platform and said, come on in and let’s talk let’s figure it out. It had never been done before. It took us a lot longer and it cost us a lot more than we thought, but it was very valuable and it led us to about three years of just talking to other regulators, talking to a lot of lawyers, Canada, the US, UK. BBI, Seychelles, etc, Bermuda, and knitting together a cross-jurisdictional securities trading framework. And our outrageous demand was that it must be retail, meaning every single person in the world, nonaccredited, other than OECD Band, which would be, say, Venezuela and Iran, must be able to access the platform with no restrictions and trade their securities. And everyone said it couldn’t be done, you shouldn’t try it, you’re going to kill yourself, it’s going to be awful, you’re going to hate everything and everyone. And there were times when we did, but the bottom line is where we ended up was that we now have via Commercial Partners, which is a network of digital securities exchanges, as you said in the intro, and they have stock exchange licenses and clearing and settlement facilities and registries. And maybe that doesn’t mean much to a lot of the listeners, but these are essential components to capital markets and without them, you must rely on a third party. And a lot of third parties that are not blockchain-based claim that they don’t understand the technology and claim that there’s a risk, but it’s actually most often anti-competition. They know that blockchain in many cases disintermediates them, not a little bit, but entirely and permanently. And so they’ve held out. We’ve been able to, through our capital markets exchange partners, put together an end capital market system. They can’t be interrupted, which is essential. And then we’ve laid on a few registrations like we have a transfer agent in the US. Money services business in Canada, a trusted company in Europe, and effectively what that’s allowed us to do, it’s a very long way for those that are interested in actually how it works, which is the hard part and the painful part that’s allowed us to get to the point today where we can list on a national stock exchange with the ability to clear and settle and register on a blockchain. We can list any asset type, fund, debt, equity, or whatever, from any issuer located anywhere in the world. So that’s the sell side. And then on the buy side, we can make that available to any investor type, credited or not, located anywhere in the world, including the US. And so we’ve been able to stitch together an entire marketplace that has no restrictions. Now, there’s a lot of work still that goes into the investment bankers putting together prospectuses, and often we have to bring in introducing brokers and they’re still market participants. But it’s getting us through this part right now and we continue to look at ways to bring in retail and issuers from all over the world without unnecessary intermediaries.

ANDY’S COMMENTS

Very nice. Thank you, James. And, of course, listeners, if you’re intrigued by the sound of Digital and what James is describing there, do suggest that you check out the website, which is Digtl.co. But Digital, of course, is spelled D-I-G-T-L in this case. But of course, a link will be in the show notes as well. As we start to wrap up James, maybe it’d be good. I just love to get your kind of perspectives, if you feel free to kind of speculate away, but just kind of cast your forecasting mind forward. Approach this any way you like. Maybe just to describe the world 5-10 years from now, if we talk again about this idea that you mentioned, your attention goes where your money flows. And how investors can begin to impact the world, how they can shape the world with their money even more than, say, their votes. And what change can we really make around the world as this sort of global, equity-based, equality-based, crowdfunding ecosystem enables all these new opportunities? Again, just any way you want to approach that, please go for gold.

JAMES’S COMMENTS

Well, you said it so well there, I hardly want to add anything to it. I mean, I think you really described that as a grassroots, community-based network of people that are talking about what’s important in life, in contrast, frankly, probably around what’s wrong in our society. A lot of the time when we bring in extraordinary innovations and we shift positively, it’s in reaction to something very negative in our world. And so even on our platform, if we look at it today, and I don’t know if this is doable or reasonable, but if there’s a way to provide a gift card link, we’ll do that. So maybe you and I can talk via email after. But I would love to invite people to the platform, not to self-promote, but really to make it available. And we can provide some USDC to play like real USDC to play with the site and look around because we have things like block streams, and mining. We have a bunch of Wall Street bets products, an insider portfolio, and El Sal, which is a basket of El Salvador funds bonds, you can’t easily get access to. And that’s just a really like, these are really good examples of, I think, products that people want from brands that people trust. And that feels good when you engage a brand that you trust. Again, going back to philosophy, hey, our core values are the same. Let’s go. I don’t need to sit here and verify and argue and debate. I already know what you stand for. I already know what you want. I think the shorthand and the short form, frankly, in crypto and specifically with Bitcoin and Blockchain, I think is spectacular. Being able to lurch forward and launch forward three years and not have to try to get the basics set. I think that the framework is built on is meant to be community driven. And I think a lot of the governance tokens were scams, frankly, and the consolidation of power. ICO 2.0 really was that innovation there was to try to bring the community and kind of like Web 2.0, right? Which that innovation from static websites now people and participants communicating with each other. I think we got that in Crypto 2.0, and ICO 2.0. But again, it was to benefit a few people, just like it benefited a few people. Web 2.0 benefited a few participants. I think that the future is truly about community-driven projects, and I’m not just talking about a couple. We talk a lot about it. There are 50 IPOs in the US, every year. There should be 500 minimum. There are 2200 in Canada. It’s because we have a different sort of approach to it. We want to see more innovation. We make markets for e-gaming and crypto and cannabis, and now we’re doing it for psychedelics. Why not let’s drive capital into these innovators? So that’s the micro IPO, they call it up here. Why not have a nano IPO?I don’t know why we can’t have like a kiva for capital markets. Why, if we bring down the cost and we just lightly wrap it, make sure there are investor protections, things are going to go bankrupt, founders are going to die, things will go badly, but it’ll be a small portion, no more than necessary. And what would kind of naturally happen in life? And if we just have people that are able to sit on a platform and talk about what’s important, find people that want and need capital, that are committed to that solution and productizing it and driving it into the market, in my view. So answering the question of 5-10 years, the people that are truly activated intellectually, emotionally, mentally, even energetically, are the ones that have actually connected to meaning, are the ones that are working every day. I use that word, interestingly, working, come home from work, and then I jump on this platform and it could be Digital or it could be something similar. We don’t have any thoughts of competition or exclusion. We want everyone to come in. But I think it is people that are working on things that matter, exclusive of family, society, politicians, governance, religion, school, whatever. These are individuals that are finding like-minded individuals and collaborating on things. And part of that is not just capital, but it’s applying knowledge and connections and so on. So, yeah, I think that that’s the future. I think that we’re going to see things revert. We’ve had a top-down system, frankly, for millennia, and I think probably the intelligence of the lower class and middle class and the technology just wasn’t there. And now we have a very educated lower middle class and we have networking technology that can bring us together. And I think we’ve, frankly, really screwed up Web 2.0. We have a lot of disinformation and misinformation, and a lot of division as a result. But I’m hopeful, and I think this is rooted in reality, I’m hopeful that we learn those lessons and we’re able to move into what they call Web3. I don’t mean that in the crypto sense, but I do mean that in a decentralized network that is actually being operated on behalf of the people, instead of in Web 2.0, being operated collectively on behalf of a handful of people.

ANDY’S COMMENTS

Again. Very nicely said, James. Thank you so much for that. Nothing else to say, really, except, I suppose please, James, tell the listeners where you can be found online if you like to hang out on Twitter or perhaps you’re a LinkedIn person. Some people do both even. What a crazy old world. And again, just tell people where they can go to learn more about what you guys are building at Digital.

JAMES’S COMMENTS

That’s funny, I’ve been too busy building things to mess around with LinkedIn or Twitter. I have profiles there, but I rarely use them. I’d encourage a lot more people, especially crypto Twitter. Stop tweeting, stop being an antagonist, and go build stuff, please. The world needs you to do things and not talk. But as I said, I’m hopeful that we can provide a link in the description that can help people get to where I think I’m available and I’m happy to make myself available with a personal link in the description. But I think joining the community is the key. That’s what I would want everyone to do. We are building right now through a framework that we’re re-architecting after some of these exchange tokens have failed and governance tokens have failed. But we really want to be able to measure and allow people to apply their views. We want them to literally vote on these things. And so anyway, the people will be able to come to the platform and tell us what they want and we will list it on a national stock exchange and you’ll be able to provide capital to activate getting connected. And yeah, we’ll make those links available in the description. We’re here to serve.

ANDY’S FINAL COMMENTS

That was James from Digital. Man, I really enjoyed that James. He was great. Great guest, an excellent talker, very opinionated, and very smart, really enjoyed talking to James. So James has kindly provided us with a link that will be or is in the show notes, which will get you access to have a little look around Digital. Please feel free to check that out. Also thought it was interesting to hear what James and the team are doing at Digital. And as I said in the show, I think the very clear synergies between what platforms like Digital are doing and what platforms like the Dacxi Chain doing. Everyone is really focused on unlocking this global tidal wave of innovation that becomes possible when you connect everyday global investors all around the world with everyday global innovators all around the world and just unleash the power of new, creative, innovative ideas. And that can only be a net good for the planet. Really exciting to see how all this plays out over the years to come. And don’t forget, of course, we’ll be tracking it all the way. We’ll be talking to all the movers and shakers leading this movement all around the world right here on Unleashed with the Dacxi Chain, the podcast that you’re listening to. So please make sure, listeners, that you subscribe to the podcast in whatever podcast app you are using. Give us a five-star rating and give us a review. We’d really appreciate it as a new podcast, but mostly we just appreciate you listening. Thanks again, team.

This was Unleashed with the Dacxi Chain. See you next time. Bye for now.