Long-time bitcoin advocate Bruce Fenton has launched a new broker-dealer for digital asset companies and financial advisors called Watchdog Capital.
The company is registered with the United States Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority, public filings show. It is a subsidiary of digital securities company Chainstone Labs, also headed by Fenton, founder of the Satoshi Roundtable conference.
He is also a previous board member of Overstock’s security token platform tZERO and was the 2015/16 executive director of the Bitcoin Foundation.
“A lot of companies have been advised by their lawyers to become a broker-dealer,” Fenton said. “What we can do is license a representative, and they can have their own business.”
Watchdog is capable of investment banking, securities underwriting, crowdfunding, starting real estate investment trusts, Reg A+ offerings and performing OTC trading for retail and institutional business.
Fenton started the process to license a broker-dealer about nine months ago and was approved to work in July, but he has been with the idea from April 2016 when The DAO, an ill-fated decentralized autonomous organization, launched.
“At the time, knowing the regulations so well, I said ‘This is not going to fly with the SEC,” Fenton said. “I wanted to acquire a firm and get the personnel in place because I think tokens are going to be a big thing … I thought they were going to be mostly declared securities.”
Watchdog Capital is operating as a back office to cryptocurrency and blockchain firms as well as serving individual representatives like financial advisors. Independent financial consultants can utilize the company’s license to trade cryptocurrency for interested customers.
“They might be at a large wirehouse like Merrill Lynch … In some cases representatives of the firms aren’t even allowed to discuss bitcoin,” he said.
Fenton describes this procedure as “decentralized” since Watchdog allows financial advisors to operate their businesses whichever way they want to.
He would not say what fraction of Watchdog’s business with cryptocurrency and blockchain-related companies would make up but predicted all assets with be tokenized in the future, as well as government bonds. (In December 2018, Chainstone got into the space by issuing 12.4 million shares in the form of digital tokens).
“You can’t move your Apple shares and you definitely can’t move shares of your local favorite restaurant around the way you can move a token,” Fenton said. “If you can tokenize those investments, it opens up a lot of exciting doors in the way that you can form capital and move money around the world.”