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Vaultbank: Using Blockchain to Create, Issue, And Trade Financial Instruments

  • 27 February 2018
  • Expert Insights

Our new Disruption by Blockchain series aims to highlight companies that are leveraging the incredible potential of blockchain technology to disrupt and revolutionize their industry. Through one on one interviews, we'll speak directly with industry leaders to cut beyond the hype and get directly to the heart of practical use cases and examples of how it will change the world, one industry at a time.

The following is an interview we recently had with Christopher Cummock, Managing Director at Vaultbank.

1. What’s the history of Vaultbank? How and where did you begin?

CC: Vaultbank was envisioned by Austin Trombley and me, Christopher Cummock in early 2017 in San Francisco, CA. Austin comes from a data engineering and finance background and I have extensive experience in investment management and hedge funds. We were both avid followers of the cryptocurrency market and had been actively involved in the space and began to notice some key missing elements. Having seen gaps in the market and a need to bridge traditional finance and its tools with the crypto market, we formed Vaultbank to be a next-generation suite of financial services to serve customers of the crypto and traditional finance markets.

2. Who are the founders and key team members?

Austin Trombley, President, Founder and CTO

Formerly Data Strategy @ Prosper
Austin Trombley, MBA, is an avid Data Engineer and Data Scientist, with a decade of consulting and leadership experience at 7 Fortune 500 companies. He recently ran the data strategy at Prosper – which upended banks from credit, and co-founded a Quantitative Credit Hedge Fund, Random Forest Capital

Christopher Cummock, Managing Director, Founder of Cummock Asset Management

Christopher has over 10 years of experience in investment and portfolio management, investment banking, syndicate calendar trading, and corporate finance.

He holds two masters degrees from Florida International University including an MBA and Masters of Science in Finance, and an undergraduate degree from USC.

Eric Clarke, Marketing Director

Eric is a serial B2B and B2C entrepreneur with a recent 2017 exit from a lifestyle brand.

He has over 10 years of experience in branding and marketing.

Eric holds a BS in Business Administration from the University of Southern California.

Chris Cates, VP of Technology

Chris is a multidisciplinary computer scientist experienced in systems level engineering and web development.

Past experience with Gimmel Fund, Skrumble, LeadLogica and Pilot Interactive.

John Nahas, Director, Investor Relations & Business Development

John has over 10 years of experience in international trade and finance, domestic and international policy, and new media. He holds a Master’s in Public Diplomacy from USC where he also earned undergraduate degrees in Communication and Political Science.

3. What problems are you solving? Who are you solving them for?

CC: We’ve noticed multiple problems, and below are specifically what we are looking to solve for crypto investors as well as new to crypto investors searching for potential stability along with returns:

– Most cryptocurrency lacks asset-backing, and also doesn’t represent an ownership in any revenue generating business.
– High minimum investment amounts and long lock-up periods for traditional hedge fund investment.
– Long set up times and high costs associated with launching securities like mutual funds.
– Lack of exchanges providing KYC, AML, and other investor verification requirements, and not offering trading of security tokens.
– Day to day usability of cryptocurrency.

4. What is your solution to those problems?

CC: To solve the first problem from the list I just mentioned about asset-backing, we have created an asset-backed token in order to offer potential stability, and also to provide our investors an equity ownership share in our business and so they can participate in profits and dividend distributions for any future success we have.

As for the second problem I noted about hedge fund limitations, by tokenizing a traditional secured asset fund that also has additional business lines, we are able to offer most people of the world a very low minimum investment amount ($100 for investors outside of the US) and also no lock-up periods (for investors outside of the US).

In terms of how to solve problems 3 and 4 that surround traditional exchanges and cryptocurrency exchanges, we have created the Vaultbank Exchange to fill the void in both areas. We plan to tokenize, launch and offer trading of a wide range of securities, as well as other security tokens. We plan to do this with low fees and with full regulatory investor compliance.

And last, in terms of crypto usability, we are working on a debit card program to enable investors and future Vaultbank debit card holders the ability to spend select top cryptocurrencies as well as Vaultbank tokens at point of sale terminals. This also will likely represent the first time an asset-backed security can be used as tender.

5. Why is your industry ripe for disruption?

CC: Traditional banks have been delayed and reticent to enter into the crypto space while many millennials and individual who distrust the big banks are trying to move away from traditional finance and are investing in crypto assets. We see this as a growing demographic that is seeking an alternative financial solution than that used by their parents and grandparents generation. In addition, major banks have limited their customers access to purchasing crypto assets and recently limited the use of credit cards for purchases. We see this as the wrong move and only has sped up the distrust of big banks and their “war” on crypto. By offering our clients a suite of financial services, and bridging traditional finance and the crypto markets we can lure a significant sector of the public which is currently active in the crypto space or seeks to get involved with a relatable and understandable model.

6. What’s the future of your industry?

CC: We believe that the crypto market is undergoing radical and almost unbelievable growth, however, there has been a lot of nefarious activity and instances where real value has not been delivered to token holders. We see the following issues arising;

Prediction #1: The SEC and financial regulators will get further involved in this space and strengthen and enforce regulations to limit fraud, abuse, and unsustainable practices. Vaultbank has retained leading securities and cryptocurrency attorneys to help us adhere to strict legal compliance regulations set forth by the SEC. When the inevitable regulations come we believe a lot of ICO’s and tokens will be shut down and we will continue to thrive in the new regulatory landscape.

Prediction #2: The established trading platforms will either have to adapt to regulations and strict KYC and AML procedures as well as service their clients in a better manner or risk going out of business. In addition, due to most exchanges being centralized, they are ripe for hacking, and a few have already been hacked and tokens stolen. The customer service of the current leading exchanges is abysmal, or nonexistent, and they have been able to get away with it due to a lack of competition. Many new exchanges are focused on a particular niche will emerge and challenge the established exchanges who have not followed regulations or ignored the needs of their customers. Vaultbank seeks to provide its users with a decentralized and secure platform which will service all their needs with lower fees, better customer service, increased security measures, expanded information for informed investing, and access to a wider range of offerings including securities.

Prediction #3: Traditional financial institutions will begin to accept and adapt to the crypto market. Many institutions have fought back against crypto, limiting their customers' access and use of funds in an attempt to stall the inevitable. We believe that these big banks will inevitably adapt and integrate crypto solutions for their customers, but it will be too late. The rise of crypto was fueled by a distrust for big banks and institutions of finance, and their delayed adoption and reticence has not gone without notice. We believe that by bridging the two worlds and providing solutions that allow our customers access to both we are at the forefront of bridging the divide and being a financial services provider for the next generation.

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