Block & Order

How Much Is That Token Worth? feat. Neil Thakur

• Falcon Rappaport & Berkman LLP • Season 1 • Episode 44

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In this episode of Block and Order, Kyle and Moish chat with valuation expert Neil Thakur of Teknos Associates to unpack the art—and science—of figuring out crypto value. Neil shares what it’s like helping projects all over the world figure out what their digital assets are worth, from the early days with Ripple to the rise of big institutions in the space, and how things like regulation, tax, and offshoring play into what assets are really worth. They also swap stories about navigating U.S. and offshore setups, untangle the challenges of putting a number on things like IP and stablecoins, share thoughts on where the industry is headed next, and why the global side of crypto still matters.

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Please note that this show is meant for informational and entertainment purposes only. This is not legal advice. Please hire your own attorney. The hosts or guests appearing on Block and Order may hold cryptocurrency, NFTs, or other digital assets from companies mentioned during our programming. This possession of digital assets does not constitute a professional endorsement, legal advice, or financial advice. Listeners are encouraged to consult with their own legal and financial advisors for personalized guidance in the blockchain and cryptocurrency space.

Kyle Lawrence [00:00:10]:
Welcome to Block and Order, your one stop legal shop for all things digital assets. I'm your host, Kyle Lawrence, and with me as always. He could have given us help, but he's given us so much more. Mr. Moish Peltz, you get a USBC.

Moish Peltz [00:00:24]:
I don't know what that means. I'm just gonna roll with it.

Kyle Lawrence [00:00:27]:
Okay. It's from. It's one of my favorite movie quotes of all time from an underappreciated 1990 bill. Bill Murray movie called Quick Change.

Moish Peltz [00:00:36]:
I've seen a lot of Bill Murray movies, but I don't think I've seen that one.

Kyle Lawrence [00:00:40]:
All right, we'll put that on your to do list. It's fantastic. Has nothing to do with what we're talking about today.

Moish Peltz [00:00:45]:
Okay, that's fine too. It doesn't have to. Just really not familiar with your game.

Kyle Lawrence [00:00:49]:
Go check it out. We'll. We'll put a link to that in the show notes as well.

Moish Peltz [00:00:52]:
There you go.

Neil Thakur [00:00:53]:
I want to thank you guys. You could have given us help, but you've given us so much more.

Kyle Lawrence [00:00:58]:
Well, Moish, we had a very special guest come by. We just wrapped up our interview with him. Neil Takor, the managing director of Teknos Associates. Teknos is a. You know, they are friends of the firm and friends of this show and we've done a lot of work with them. They are a valuation firm foremost among other things. And they have really taken the lead in the past few years of conducting valuations for digital asset companies. People who are launching tokens and who are really releasing all forms of digital assets.

Kyle Lawrence [00:01:28]:
And they've been getting in on some of the bitcoin treasury company action as well. So, you know, Moish, what were your initial takeaways from our conversation with Neil?

Moish Peltz [00:01:37]:
Well, I mean, it's just, it's such an interesting vantage point that, that Neil and Teknos have in terms of seeing just all the activity and all the token issuances and you know, how people issue and why they issue and you know, sort of the regulatory and risk ramifications of that. So just that, that I think that just really bleeds through and everything he was talking about.

Kyle Lawrence [00:02:00]:
Yeah.

Moish Peltz [00:02:00]:
And you know, we certainly got in that experience working with them on our mutual projects. But I think it's really nice to kind of have a more, you know, unstructured conversation here and, and hear from Neil what he's seeing in the industry. And even though we're very excited about, you know, everything happening in the United States and a lot of onshoring and a Lot of entrepreneurship happening in the United States. It doesn't mean that all the valuation and tax issues go away. And so that's what we talk about for a fair bit of the show.

Kyle Lawrence [00:02:27]:
One thing that he mentioned, it came up organically in the conversation and it's something that I guess in the back of my mind I had noticed, but it never really crystallized earlier in this year. I'm going to backtrack a bit earlier this year after the inauguration, the talk was everything is going to come back to the United States. We have a friendly environment now. Everybody who was going offshore to launch a token or to start this or that company, now, they can do it here. And slowly but surely we saw that that wasn't necessarily the case. And he nailed it. You know, he has a more global view with what he does. He's based in the Cayman Islands.

Kyle Lawrence [00:02:59]:
We're obviously here in the U.S. but he, you know, candidly said it. You know, a lot of people, there's still a lot of hesitation to set up these companies in the United States, whether it's taxes, whether it's the ever changing winds of the political, you know, political pendulum, you know, whatever it may be. But he really, that really crystallized the point for me that I guess I never really, I noticed but didn't realize if that makes sen. So it's interesting to hear him talk about how there's still offshore companies, even with a friendlier US People are still looking offshore.

Moish Peltz [00:03:30]:
Well, look, people are never starting hedge funds. You know, they were never getting the feeder to.

Kyle Lawrence [00:03:36]:
Right.

Moish Peltz [00:03:36]:
Because they didn't want to BE in the U.S. it's like, well, there's, there's a, there's a kind of business goal that they're trying to achieve with that structure. Same thing, right? It's just like there's different business structures for different end goals. And the US can accommodate some, some, but not all of those. And even I think projecting forward two years when we have market structure and we have a new tax bill and everyone's hunky dory, like we're still going to have a need for offshore structure and council and valuations and etc. Right.

Kyle Lawrence [00:04:04]:
Well, we'll always have a need for the folks at Teknos and Neil and his partner Casper, who could make it as well. We'll put their contact information down in the show notes. If you have any questions, please contact us or feel free to contact them. They're, they're awesome guys. We love working with them. You know, Moish, you just released an article that you co wrote with them. They really do wonderful work in the space and I highly recommend you check them out. And with that let's kick it over to our conversation with Neil Thakur, the managing director of Teknos Associates.

Kyle Lawrence [00:04:36]:
Well, joining us on block and order today, a very special guest we have Neil Thakur, the managing director and co founder of Teknos Associates. Teknos Blockchain and Cryptocurrency Group provides valuation services for tax, financial reporting, gift and estate and corporate planning purposes and has done so since 2016. As leaders in the space, they cover all digital assets including, including cryptocurrencies, NFTs, other tokens and entity interests and digital assets. And their clients range from early stage projects to large cap L1s, foundations, private equity and VC funds, high net worth individuals and Web3 executives. So Neil, welcome aboard. Thank you so much for joining us today.

Neil Thakur [00:05:15]:
Thanks for having me Kyle. I definitely appreciate it and excited to get started and talk through everything that you've just described.

Kyle Lawrence [00:05:22]:
Well, we're also excited to have you and it looks like you're actually in your home base but you've done some jet setting of late. Why don't you fill us in on some of the things you're seeing in the world.

Neil Thakur [00:05:32]:
Yes, we are distributed as a company and decentralized if you will, very consistent with the industry. So yes, this is the home office and headquarters of our firm. But yeah, you're exactly right, we do a fair amount of travel have hit a lot of the conferences that we're all kind of familiar with. Just recently we were in token 2049 over at Singapore, which was a very interesting and I think fruitful conference just from an educational perspective and just from just a client relation perspective as well as often we tend to see a lot of our clients and partners at these events just because they tend to be very, I think global in a sense of just the nature of the industry and just the way the entire kind of community works in general. So yeah, it's been very positive. But yeah, just trying to catch up on sleep is not very productive in this environment.

Kyle Lawrence [00:06:35]:
Sleepers of riddance.

Moish Peltz [00:06:37]:
Yeah, we were just talking about how, you know, you'll be on telegram with someone for two years and never actually, you know, meet them or talk with them until you happen to run across them at a conference planned or unplanned. So that's, that's always a fun experience and I'm curious, you know, there's always, you know, different vibes at all these different conferences and you've now you're in the stretch of, you know, run here. Just curious, like what, what are people talking about now? What are people excited about? You know, bitcoin is at an all time high this week. I don't know if the industry feels that way, but I'm curious like what you're seeing out on the road.

Neil Thakur [00:07:13]:
Yeah, it's probably the narratives that you'd expect. Right. So it's interesting like we've had this dynamic kind of go through the, the industry in general and you know, historically we've been spending a lot of time on projects that are launching and a bit of that has taken a kind of view as we focus on a lot of institutions coming into the space. So you know, DATs are, are obviously very popular, but that is coming down a bit as we see some of those multiples on value kind of shrink a bit with some of these DATs that come in. But stablecoins, right, are huge. Right. I think that has been kind of the topic of discussion around the world focused in, on, on, you know, that the regulatory part of that, depending on what jurisdiction you are in. But certainly the US is really focused in, on making that happen with some of the regulatory movements that have been made.

Neil Thakur [00:08:14]:
So those are all good. So you know, that is an area of focus that we're seeing a lot of interest in. And so obviously like, you know, the institutions are getting involved. Right. And so you have a lot of these larger players where that capital is coming into the space, which historically we haven't seen. It's always been like the venture funds that we all know that are involved with it and the traditional projects. But now as you see kind of larger, bigger players express an interest in some of these investment opportunities either through DATs, SPACs, pipes and obviously stablecoins. All of that is bringing capital into the play and from, from, from all walks of life.

Neil Thakur [00:09:01]:
And so, you know, with that comes different types of scrutiny as we will see coming down the road. Everything from, you know, financial reporting and tax and people taking a little bit more seriously. Not that it wasn't before, but you know, you start issuing a little bit more capital from traditional players and they have different risk profiles. You know, we're going to see a little bit more scrutiny around this. So yeah, I mean, I think it's all this capital is starting to come in and you know, from the more traditional sides of things and I think it's good for the industry. Right. If you think about overall capital in the industry associated with, with you know, just the crypto world, it's fairly small when compared to like the larger financial markets. And as allocation starts to increase across the board we're going to see a lot more of the, I think the emphasis on the market.

Neil Thakur [00:09:51]:
So yeah, excited to see where it goes. But yeah, those are some of the narratives that we're seeing out there in the market.

Moish Peltz [00:09:57]:
Yeah, that, that matches up really closely with what I was, you know, I was just at a big, you know, crypto legal conference and institutionalization of everything for sure is, is a big one. The stable coins with the genius act and now people waiting for regulations and further promulgations to go along with that. Everyone's kind of absorbing that and figuring out what to do next. And, and yeah, I mean the, the DAT thing is something that you know we, we've, we've had a hand in some projects as well and it is like this weird thing right. When the net asset value of their pot of crypto is they're trading at a discount to that like what happens. And now you're seeing M and A and other. Right. Reinstitutionalization of what's happening there.

Moish Peltz [00:10:44]:
So it's super fascinating. Well, so I guess the question is, well you know, maybe you can tell us a little bit about Teknos. I was going to ask about how that affects Teknos but why don't we talk about what Teknos is and what you do and then we can, we can get there.

Neil Thakur [00:10:57]:
Yeah, happily to have that discussion and thanks for setting us up in terms of overall kind of broad strokes of who Teknos is Kyle. I do appreciate that. And just to provide a little bit more context just at the highest level we are evaluation advisory services firm. We've been around for about 20 years and in this space for about 10. And you know, it's interesting just how can we fell into it. It's, you know, we've always had an interest broadly in technology and this particular space personally. And then you know, one day I got a call from a very well known client in this space, well to be client at the time called Ripple and they had some XRP with a market maker and they're trying to figure out how to price the deal and there was some tax effects associated with it and no one wanted to touch it from a valuation perspective at the time. Yeah, people are like what the heck is this? Right.

Neil Thakur [00:11:58]:
It was criminal, right. To think about the industry in any regulatory way. And so we took a stab at from a financial modeling perspective to figure out the complexity of the analysis and try to understand kind of what it was worth. And literally from that exposure we started getting calls from other guys in the space over the next years. So think, you know, Chainlink, filecoin, Hedera, Uniswap, all these guys had different use cases where there was either a digital asset that was going to be issued or it was minted recently and there was potentially, you know, some tax effects associated with, or there's financial reporting associated with it, or it was just for a deal. There was some sort of structure where you had this asset that had speculation around what the value of it was worth. And so, you know, to do any of these transactions you need to understand the underlying basis for that value. And so, you know, we just started into it and you know, we survived the ups and downs, the volatility that we all see in the market.

Neil Thakur [00:13:04]:
You know, a lot of sleepless nights of is this industry going to be somewhere? Does it make sense for us to like put all our resources into it? And you know, at the end of the day here we are working on, having worked on thousands of projects in the space everywhere from looking at, you know, the digital assets themselves to equity complex securities and ip. Right. Which you know, obviously we'll get to. But anytime you look at this particular industry and you think about just the global nature of it, there's always kind of valuation related or centric issues that come up. When you're talking about things that are cross border related or just kind of moving around any kind of complex manner, that's where we find ourselves. And you know, just as a firm at this point, we are just mainly focused on that particular industry, if you will, just because of the complexities and you know, just seeing what's happening here in the US in relation to the rest of the world and seeing some of the regulatory kind of influences which all are very positive now as opposed to some of the things that have happened historically. You know, there's just more expectation that, you know, you know, diving deeper into some of the complexities of it will make sense for us. And so yeah, we find ourselves kind of well positioned just based off of our experience in the space and a lot of the work that we've done.

Neil Thakur [00:14:33]:
So yeah, yeah, that's hopefully a little bit of background.

Kyle Lawrence [00:14:37]:
No, that's great. And we applaud the entrepreneurial spirit. You know, you're talking about when XRP approached you and nobody else wanted to touch it. We, you know, when Moish and I started the Digital Assets Practice Group, there's a lot of that going around. There's still A lot of that going around in the legal space, which is kind of crazy. But as somebody who works in the M and A field, as I have for nearly 20 years, obviously I've seen a lot of, you know, QOV reports and valuations, hundreds if not thousands. And there it's easier, it's more of a, of a straight line. It's, you have a business, this is what their revenues are, this is what their EBITDA is, this is what the competitor does.

Kyle Lawrence [00:15:12]:
This, you know, all that, this, this. It's easy metrics. But when, now it's easier for you than it was a couple years ago. But when you're starting with XRP without giving away the secret sauce, where did you even start? How would you begin to do that? That's fascinating.

Neil Thakur [00:15:28]:
Yeah, it was a struggle at the time of trying to understand how this value that it was trading on exchange and think about the exchanges back then and how that was all like, what could we put in terms of trust of what the value was? You know, how do we understand what is this truly a liquid asset? If so, where do we start? And then from there, when you talk about, you know, potential kind of restrictions on this asset, you know, what does that mean for potential value on that? And so we look at it very similarly to some complex securities of, call it, you know, option pricing theory and binomial models and that type of world of, you know, a restricted asset has potentially a different type of value if there's some optionality to it over time. And so we started with that kind of construct and we settled on a way of calculating a discounting mechanism to kind of incorporate potential valuation related issues on a lot of this stuff. And that's kind of where it started, right? You have this asset that is, has liquidity issues, has marketability issues and then you kind of build a case around that. And so that's kind of the central kind of thought process around it. Now obviously there is more data, but candidly there is a lot more data. But are we still in a better place? Because what are the metrics that you should be looking at, right, in terms of. And now we're talking about things that are traded, you know, what can we trust? What are standardized metrics in the industry in terms of like adoption and users and all of that? Because quite frankly, like, you know, if I try to put some sort of multiple on that, I'm not really trusting all that very much.

Kyle Lawrence [00:17:27]:
Easily.

Neil Thakur [00:17:27]:
Right, well that gets back to the.

Moish Peltz [00:17:30]:
DAT question, right, which is how do you value these companies and why is the M Nav different than the underlying? And then yeah, it's like, well, that you can run a line from that all the way back to the tokens are on Mount Gox. So what are we going to do?

Neil Thakur [00:17:49]:
You're exactly right. Right. So when we remember like those multiples of nav, right. In the beginning of all the DAT kind of craze, it was like five to seven times and you know, the MicroStrategy guys and BTC is something else right now you've got all these other assets that are coming in and now it's getting closer to one and you're thinking and everyone has the narrative like, oh well, you know, we're not just this company, we are. There's going to be all these other operating capacities that are going to increase value above and beyond of all that in terms of staking mechanisms, et cetera. But you know, is there really like value beyond that? I don't know. Right. It just depends on the specific use case.

Neil Thakur [00:18:33]:
But you're exactly right in terms of some of the things that we're starting to see like does the market really truly see that. That and expect that type of value appreciation? I don't know. But yeah, someone raised the question.

Moish Peltz [00:18:44]:
I'm curious what your thoughts are on about. The same question applied to stable coins, even usdc, which a dollar is a dollar. However, when you. And this is the argument that the banks are saying is you can't stake stable coins or at least a stablecoin provider shouldn't be able to stake stable coins because then they're presumably not worth a dollar because they have, they have the ability to appreciate and generate yield. So something that's worth a dollar but generates 4% yield, I don't know, is that worth a dollar? So I'm curious if, if that's something that you've gotten into in thinking about stable coins and how the market should. Should think about, their people in the industry should think about.

Neil Thakur [00:19:21]:
Yeah, yeah, you're exactly right. I think, you know, the stablecoin kind of concept is very interesting. But yeah, as you have the ability to stake and. Right. There's differing opinions on that stake and that interest and what that represents. Is that actually a security? Is that really income? How do I recognize that and is it worth more than just what I'm producing at the end of the day? Yeah, I think it just kind of depends on the use case for it. Right. You know, banks versus other guys.

Neil Thakur [00:19:51]:
And then on top of that. Right. Like really the concept is to get people on chain. Right. You know, that's a lot of the focus around, you know, just having these, these payment rails that exist. Right. It's just to bring the traditional, you know, world into our kind of digital asset world. And you know, everyone's talking about, let's say 2030, everything is going to be something related to blockchain kind of infrastructure, which is great.

Neil Thakur [00:20:19]:
And then you have the idea of like, you know, this 24, 7 Marketplace and all of that. You know, if, if I have a company and you know, and look, Robinhood has already experimented with that and you see other guys that are saying, hey, I'm putting my securities on chain and everything and that's great. What does that really represent in terms of value? Does it give me like the same rights as others? And you know, is my security, is this claim to this asset equal in all capacities? I think there's, there's different schools of thought on that. But yeah, the idea is that we're getting everything just to a point where everything is traceable and on chain. And I think that is positive. Right. But in terms of like the value appreciation, I think the jury's out on that. I think the markets will play themselves out on that.

Neil Thakur [00:21:10]:
But right now, not great metrics to really track anything just yet.

Kyle Lawrence [00:21:15]:
That's a great point. And we can all talk about the modernization of the financial system, which is a big driving force of this, the, you know, the genius act. That's part of the DNA of why that legislation is so important. I mean, just to update the framework and the mechanisms of these banks and old institutional payment solutions are using. It's a no brainer. But you're exactly right in that it does also present some risks that we can't possibly necessarily envision. I mean, some people can, people smarter than I can. But you're right, we're looking at a one, three, maybe even five year timeline before you can look back and say, well, that's great that we solved this problem, but now we have these other things that stem from it.

Kyle Lawrence [00:21:54]:
And one thing I always like to think of is you mentioned Robinhood. It's great that I can go on my phone and I can buy, you know, Nvidia in five seconds. But the problem that introduces is things move so fast it's almost impossible to quantify what's going on. For someone like you, I think that presents a unique problem that didn't exist before. And I'd be really curious to see how that plays out. There's no real question in there. It's more Just a me pontificating. But I think that's a really interesting thing that people, you know, progress, progress and number go up and bitcoin is an all time high and that's all awesome.

Kyle Lawrence [00:22:27]:
And we all love to just run forward and don't look back. But sooner or later we're going to have to and see where along the lines that we need to improve what's already been improved upon.

Neil Thakur [00:22:37]:
Oh yeah, I did just think about like just some of the traditional things that, you know, we, we all kind of come from. You think about like research analysts and stuff like that. The equity market and. Right. We're hearing about like, oh, we don't need to do quarterly anymore.

Moish Peltz [00:22:49]:
Right.

Neil Thakur [00:22:49]:
Maybe it's going to stay. I mean, I'll leave that Al, you know, what about that world?

Kyle Lawrence [00:22:56]:
Right.

Neil Thakur [00:22:57]:
How am I going to, you know, what are my earnings estimates? Right. And if you've got this digital asset kind of playing out on this and there's 24 7, like, you know, what are the demarcation kind of points here for trying to understand what the expectations are and as a company too, how do I fit into all of that? Yeah, it's certainly be interesting.

Moish Peltz [00:23:16]:
Yeah.

Neil Thakur [00:23:16]:
But those are things that, yeah, we are as a kind of a valuation firm and advisory firm, things that we're thinking about constantly right now. So agreed on that.

Moish Peltz [00:23:27]:
So let me, let me ask a stupid question and I say it's stupid not because the three of us think it's stupid, but because we get asked this all the time, which is, all right, I'm forming a blockchain company. I am planning at some point in the near distant future to issue a token. What's evaluation? Why is that relevant to me? And I guess my part two to that question is, is it relevant or, you know, more or less relevant to me if I'm forming this company somewhere offshore versus, you know, I'm energized and excited and want to form my company and issue my token in the United States.

Neil Thakur [00:24:06]:
Yeah. God, so much to go with that.

Moish Peltz [00:24:10]:
Start wherever you want. And it's just a stupid question. You know, people ask you this, it's.

Kyle Lawrence [00:24:16]:
Like the scene in Back to School. I have one question in 27 parts. That's what Moist just did to you. I have only one question for Mr. Mellon.

Neil Thakur [00:24:33]:
In 27 parts. No, it's, it's look, it is. And look, questions that we get constantly. Right. So I guess on the token side of things, if I'm issuing a token. Yeah. There's obviously a lot of use cases to it. I think one of the biggest things think about just broadly is people say this all the time, don't make the token the product.

Neil Thakur [00:24:56]:
The token should be kind of complementary to things that you are already doing. That said, there's plenty of meme coins.

Moish Peltz [00:25:04]:
One would hope that it's not.

Neil Thakur [00:25:05]:
Yeah, you would think.

Moish Peltz [00:25:07]:
But there's some utility or function within an ecosystem. Right. It's accomplishing something that some other token doesn't already accomplish. Right, right.

Neil Thakur [00:25:16]:
And that would be the idea. Right. And so you've got this token that is complementary to this concept, right. You know, whether it's in defi gaming or other types of kind of industries. And so if that's the case, and then you have a company that's gone out and raised money and either probably from the rental venture world and a lot of times it has this massive safe valuation cap and there's this implied value towards it and then you're going to issue a token. So in the early days the idea is that the token, just because it's speculative, may not have a lot of value and there's different methodologies to get there to kind of justify that concept. There's a lot of things, especially in the IP world, we talk about kind of cost based methodologies, there's market implications as well. And through the marrying of those you can still at very early stages justify why that value is low and the reason why that makes sense.

Neil Thakur [00:26:12]:
And then some of the use cases around that of distributing the tokens to founders and early players in the market to understand and take full value of that, like what we do in equity. Right. Like if someone's issuing shares of a company that's just founded, it's very similar. Right. This is just for the token part of it. That's why the value of that token may be on the lower side and why it makes sense to issue those tokens to entities and individuals at early stages. Once that grows and the token launches and the product actually separate from that starts to take shape, then you start seeing more value. And then do you do this here in the us? Do you do this offshore into the Cayman, Switzerland, Singapore, that is.

Neil Thakur [00:26:59]:
And I will probably push that question to you, but I, I will just say this on our travels, you know, just, you know, being in Switzerland and in Singapore and other jurisdictions that we, we know a lot of folks in the Cayman, it's interesting just to see that concept. I can say that just through conversations I've had, you know, here in the States with certain either regulatory bodies or other People close to the industry, there is an emphasis to have things here, right. And you've seen like the Duna structure. Right, all of that. And with the regulatory kind of winds pushing back to the states and making it safe for us to operate out of here, the concept of offshoring things may not be necessary. But I think what's interesting is that now that has become, because of the, the way that the US has changed kind of back and forth a few different times, it's almost like, you know, like the Cayman or offshoring is the conservative way to go.

Moish Peltz [00:28:04]:
Right, right.

Neil Thakur [00:28:06]:
You know, it's just really weird to see that. And so I would say, like a vast majority of folks that we talk to are starting a project still, you know, prefer just, hey, look, we know this is Triton true. We know where the issues are, right. In terms of, you know, separating 482 and all of that. Like that concept of, you know, disaffiliated entity and all of that. Right. We, we know that. Hey, yeah, it hangs by a certain type of concept of, you know, justification, if you will, right.

Neil Thakur [00:28:35]:
In terms of, you know, the relationship between the two. What's, what's the value if I'm licensing things or there, you know, if I'm transferring the property, etc. I know what I'm dealing with there. Right. I know how to justify that to a certain degree. And you know, the Cayman guys or guys in Switzerland or whatever other jurisdiction you want to do this in, we know how to operate on that. And so it's interesting, like, while I feel like there is an emphasis to bring stuff back and I think we will have more things start and structure out here in the States eventually. Just in the short term.

Neil Thakur [00:29:10]:
Well, short to medium turn, I still think we can expect, you know, the, the offshoring kind of concept to continue with a lot of projects, at least for those who I've spoken with. But again, yeah, specifics. I'm curious to hear kind of what you guys are seeing on your side.

Moish Peltz [00:29:27]:
Well, that makes a lot of sense. And, and, you know, I think we've, we've done both the offshore and the, and the Duna structures and the concerns with the doing a structure right is, is the tax. Right. That's one of the big hurdles to, to making that process as smooth as, you know, what's often advertised as the offshore structure. And so. Right. So I know, I know now, like we talk about medium term, there is, you know, a tax bill that, and, or tax fixes that are being proposed and I, I think those kinds of questions are, are obviously what's circling around, but, but that's not where we are today. And so, yeah, you solve for a lot of the regulatory pieces with a change of administration and a more friendly environment in the US for entrepreneurship, especially in this, in this industry.

Moish Peltz [00:30:16]:
But you still can't get past Treasury. And so that's like, you know, so that, that makes it difficult so you, you can, it's just not as efficient. Right. And so like a lot of people want to be here, I think want to be here for good reasons and they just have to understand, you know, the different risk appetite and, and cost of doing it in either direction.

Kyle Lawrence [00:30:35]:
The other, the flip side of the coin is. Great points, Moish, is that this is still a global industry and if you are, you know, if you're raising money or you're issuing a token or whatever it may be, and you're focused solely on United States people, that's one thing. They're already paying taxes here. But if you have one of these pass through taxed entities, an llc, an LP or the functional equivalent, and you're based here and you have people from overseas coming in, they don't want to pay it, they don't want to file a 1040 and deal with that. So you still, I'm still getting tons. In fact, have one I'm working on right now where we have this master feeder structure where the people are in the US but they have an offshore fund for the overseas people to help shield them from that. That is still very much a top of mind concern for people, as it should be. I don't want to deal, I don't want to deal with the irs and I live here.

Neil Thakur [00:31:23]:
I know, I know. It's so true. It's so true. Yeah, you're exactly right. When you think about the capital and the funds that are coming from the offshore kind of concept, it's exactly the concerns. Right. And the issues you have to deal with there. So I hear you on that.

Moish Peltz [00:31:37]:
All right, well, I wanted to turn to something that we recently collaborated on together, which is I know that you guys relaunched your website and we worked on some, some content there, so maybe, you know, and you could talk about kind of what you're doing and, and why you decided to relaunch and kind of the, the holistic picture and then we can dive into some of the topics that you're, you're, you're speaking about in more detail.

Neil Thakur [00:32:03]:
Yeah, I appreciate that opportunity there. Yeah. It's funny because it's Been this long kind of thought process for us in terms of rebranding our organization and like the organization itself is still kind of, as I mentioned before, kind of focused in on advisory and valuation. But this particular industry has really kind of captured a lot of what we do as an organization now. And it's not going anywhere. Right. And I think we, we got comfortable with that idea a few years back. Probably like three or four years back.

Neil Thakur [00:32:43]:
Yeah, it's like, you know, post FTX and then, you know, everything kind of survived and we started to see this momentum and I'm like, you know, I thought to myself, like, yeah, we just gotta, we just gotta go all in on this and just commit. And it's just the thing is, it's like we're a small kind of boutique firm, right. And so just finding the time of resources and just getting everyone together because at the same time we are traveling, we are doing the work and we are figuring all of that out. To spend time kind of doing something like this, which, you know, is something that it takes some thought, right, in terms of what you want to message out to the world of who you are and what you represent. We wanted to do it effectively and thoughtfully. And so part of that was putting out some more content about some of the key topics and things that we are seeing and also kind of formulating, just accommodating all the stuff that we've done historically. Right. Like let's put some thought around that in terms of the pieces and hence the collaboration piece like that we've done together I think culminates a little bit of that too.

Moish Peltz [00:33:53]:
Right?

Neil Thakur [00:33:54]:
It's, hey, you know, just like we were saying, like, should you be offshoring or should you not be? What are some of the things you're thinking about? What are the things that we've had to deal with in the past and how we put that together and coalesce that around kind of a message. And so there are a lot of different things, there are topics that we can, you know, dive into. And we thought let's, let's do this in a rebranding kind of mechanism of who we are and what Teknos represents. Because you know, there's, there's a lot of people, a lot of firms that are, it's just kind of low hanging fruit. Oh yeah, we do crypto and we're in the industry and it's like honestly with something that's so, you know, lacks regulation. And I know there are things that throughout the world people are putting stuff into play but the reality is, it's like it comes down to, and you guys probably understand this, it's about like, you know, experience, right? And you know, you have to make, you know, certain judgment calls on things when the area is great the majority of the time, right. It's about interpretation of facts and circumstances. And you know,  it could be for digital assets, it could be for equity, it could be for debt.

Neil Thakur [00:35:01]:
Whatever the, you know, the investment vehicle is, there are different perspectives on it. And so by utilizing our kind of experience and you know, putting that all out there, we've written all these different pieces to help with the kind of rebranding concept of who we are. And it's funny it's rebranding, but it's just like in many ways, I think to myself, like natively, it's kind of who we are in general in terms of this type of firm. And so that's kind of what pushed us to, they just took us some time. And candidly, technology too is a little bit easier to deal with. I mean, just through the ability to spin things up in terms of platforms and AI, etc. It certainly helps us. Whereas, you know, we don't need a full stack developer to do things anymore.

Neil Thakur [00:35:49]:
In the same kind of vein, I still, they still have their role, but for a small firm like ours, we have a little bit more leverage to, to be successful and get this stuff out a little bit more effectively and thoughtfully. So that's kind of where we, it brings us to today. And you know, why it makes sense for us to, to be talking about it in terms of, you know, Teknos crypto, if you will.

Moish Peltz [00:36:13]:
Awesome. Yeah. And you can tell it's a good rebrand because it's, you know, you're, you're, you're talking more truthfully about yourself. It's like, oh, that's, that's you want to be. Yeah, there's, there's some really good, you know, but we'll post a link obviously in the show notes and there's some really, you know, great educational content to answer, you know, some of these dumb questions that people come up and like, well, what, what, why, what? That's why would you value token or why would you value ip? And so to get into that topic, I'm curious, you know, just how, how you guys approach valuation of intellectual property in this industry and, and why people, you know, often need to do that and, and just like how you work through like actual evaluation challenges and like how that's specific to this industry versus you know, valuing just a trademark for, you know, manufacturing business.

Neil Thakur [00:36:59]:
Yeah, that's a good question. And the use cases are fundamentally kind of focused in, on like what we just talked about in terms of, you know, offshoring, right. And typically what you have is you have these entities where you'll spin up like an operating company in the U.S. right, where you know, everyone is functioning out of the concept of the project. And then you're thinking, hey, we may want to issue a token. And so that lends itself to wanting to do that from other jurisdictions. And as you mentioned so accurately, there are tax implications around that. Right.

Neil Thakur [00:37:41]:
And so if I start issuing a token, doing that out of a foundation concept potentially makes the most sense just because of the concept around taxation and foundations and the, the positive kind of attributes to that. And so if I'm going to do that and I'm going to set up some sort of entity in a jurisdiction that's more call it tax efficient, friendly, you know, we'll use whatever word you want. Then there's usually something that's going over there, right? There's some sort of technology ip. They're centered around, you know, the protocols or the software or, you know, the development of that. And even if it's, you know, open sourced, right. There's still kind of thoughts that you have to think about in terms of the utilization of that. You know, you send white pages and smart contracts and all of that. That's different than probably a traditional company, right? That is offshoring its technology.

Neil Thakur [00:38:40]:
And so as that's moved over, depending on how that's moved over, either via, you know, maybe you're licensing it back, then there's a valuation implication there. If you're actually just sending all of that IP over, then there's another valuation kind of impact. And so depending on when that's all happened and what's happened at the operating company prior, there are different kind of valuation concept, right? Again, we kind of refer to the cost plus of development of all of those assets. That that's one kind of methodology. There's a combination of using that with implied values if you've raised significant money for the company in of itself and it has an implied valuation associated with that. And you can combine that concept with the cost approach. There's just overall invested capital kind of thoughts. Doing an income based approach, I would say is not something that is particularly done just because of the lack of clarity around projected cash flows in this industry, maybe around staking and all of that.

Neil Thakur [00:39:44]:
But usually this is done before the project is live. And that's the reason why you do it. Because if you're going to transfer anything over, you want to do it with a lower tax base if you can. So, you know, those are some of the things that we would think at which about that are very different from a traditional, you know, you know, let's see what the multiples are in an industry or what, what is my expected cash flow? Because when you think about it from that perspective, it's like we're talking about like an entity, we're talking about a token, a specific asset. And you know, for a company, right, you know, I own, I have a product, right? And I produce revenue and then, you know, I can figure out what the overall implied value of the company is. If we look at like this particular asset, like that asset's like, I don't own that whole asset. Like that's not my company, right. Like everyone has claims for that asset and then that asset can appreciate or depreciate over time.

Neil Thakur [00:40:40]:
And that's not like, that's not the value of my company necessarily. Like I may have 30% of that allocation, right. And what else is my company doing is that there are other things that are there. So like when I'm valuing the company versus valuing the token or like aspects of things that my company has a claim to, there's different kind of concepts, right? And so that is where some of the challenge kind of lies. When we're working with the companies themselves and then the token itself and then the ip, you have to kind of allocate different types of value in between and there can be different challenges there. So yeah, those are a lot of things that we think about. When you start digging into this and then, you know, you start thinking about like, sorry, not to go off topic here, but like you're speaking my language. Yeah, I was just like, you know, now we start thinking about companies going public, we start thinking about the M and A world, right? And so what does that mean if I'm going to buy another, you know, project or company, you know, what do I, what am I buying, right? And you know, you see some of the IPOs which ironically enough, you know, the IPO market was dead for the last like 18 months and the big ones that have been come out, they're all crypto related, right?

Kyle Lawrence [00:41:50]:
That's right.

Neil Thakur [00:41:51]:
So yeah, clearly the market has an appetite for it and everyone believes that there is. And I'm talking about apps that like just the SPACs and in the pipes. I mean, you know, think about like, you know, figment and figure and circle, like all these other companies. And there's a, there's a laundry list of companies that are in line to go public because these crypto, crypto adjacent companies are driving the kind of, the institutional kind of forces around this. And so again, valuation issues, very centric to all of that. But anyway, sorry to go off there.

Kyle Lawrence [00:42:25]:
No, it's all great stuff. And by the way, tangents are what we love. If you want to, you can talk about anything. This is, it's fair game here. I mean, you're in the Cayman Islands, we're in New York. Like you're doing something right. So it's, you know, it harkens back to what you were talking about in the beginning, about how now we have institutional players in the game and, you know, Rising Tide floats all boats. It's not just, you know, that institutional players are here, it's that that legitimizes the space.

Kyle Lawrence [00:42:52]:
The IPO market, you nailed it, has been, you know, dead as a doornail. I think Birkenstock had an IPO earlier this year. Well, like, what, really, what are we doing here? But now that you, now that we have the institutional players and we have the US Government treating this industry with a little bit more respect than the prior administration did, all of that, you know, heads in the direction of, you know, IPOs and mass adoption and improving these payment rails. It's just another, you know, check, check of the box of what, what we're talking about here. And if the IPO market can thrive, then that's great for certainly great for us as lawyers and you as evaluation expert. It's great for everybody. It's just another feather in the cat. So, I mean, that's great stuff, Neil.

Moish Peltz [00:43:35]:
So.

Kyle Lawrence [00:43:35]:
Yeah, I agree.

Neil Thakur [00:43:36]:
You're exactly right. Just exciting to see that kind of all move forward in that vein. And yeah, there's going to be growing pains around it. Certainly expect that, if you will. But we're going to come out on the positive end of it, I think, just as an industry because, you know, there's a lot to kind of be excited about. Right. Just as, you know, this technology takes hold and we kind of, when you really drill down to kind of the optimistic kind of side of what this technology can be and we lose the kind of the speculative narrative of it. Right.

Neil Thakur [00:44:16]:
Eventually fundamentals will come into play. We just honestly, we need to standardize things. We need to get comfortable with what sort of things things mean. But there's a lot of education left, right. In the industry to occur there, for, for that to happen before we get there. But we'll get there. It just takes a little bit of time.

Kyle Lawrence [00:44:34]:
I don't know if you had a follow up based on your, your ip. You're glimmering.

Neil Thakur [00:44:41]:
I can see it, I can see it.

Moish Peltz [00:44:42]:
Germany. No, I was just going to say it's, it's, it's very fascinating to me that, that on the one hand there's institutionalization of all this, but then on the other hand, what I think is really exciting about IP in this industry is that it is so different than most other industries in the sense that a lot of it's open sourced, a lot of it is globalized, community based. You have contributors from all around the world and then obviously you have much more of this internationalization. It's not just, you know, Delaware C Corp. There's, there's companies that are based in far flung jurisdictions or in multiple jurisdictions or there's a US Devco and a found like an ownerless foundation that owns the IP and is doing this. And so like, yeah, you got the, you got the kind of financialization of everything too. And so like that whole construct is really like IP is enabling that in some respects and it makes it a very interesting, unique industry. So again, I'm not sure there's really a question there.

Moish Peltz [00:45:49]:
I guess the question would be is do you see that? Does that kind of bleed through in the work you do? Or it's just like, well, an IP holding company is a IP holding company, whatever. I'm just curious how you approach it that way.

Neil Thakur [00:46:04]:
Yeah, it certainly does bleed through in terms of everything that we do. Right. Because we have to understand kind of what the underlying concepts are for all these entities. And it's different. Right. I mean, at early stages you could make parallels to other things, but if you take the long view towards it, Right. In terms of what these entities represent and what they're holding, understanding what the long view is around this particular asset class is certainly very important. So yeah, I mean everything from where these things are, are domiciled and what the relationships are amongst, you know, different jurisdictions comes into play as well.

Neil Thakur [00:46:45]:
Right. And so, yeah, I mean we'll see something based out of Dubai, but at the end of the day you'll still have a Cayman foundation and they're like what? Like, it's very interesting to see that come into play. There are some people who don't want to touch the US Still.

Moish Peltz [00:47:00]:
Right? Yeah.

Neil Thakur [00:47:01]:
And so, and they'll work around it, they'll have their devs out in France, right. And then they'll be domiciled somewhere in Liechtenstein. And then there'll be, you know, guys still having a Cayman foundation. And then there'll be something happening in Singapore, but there will be no U.S. presence.

Moish Peltz [00:47:21]:
Right.

Neil Thakur [00:47:21]:
You know, so, you know, we see that as well. It's very interesting to see kind of, you know, the internationalization, the globalization, if you will, around a lot of what we do and. And then how the technology kind of flows back and forth between these different jurisdictions. And what may be true in the Cayman Islands may not necessarily be true in France or Switzerland. Right? So a lot of what we do is understanding how the technology equates to value. And then you layer on whatever jurisdiction you're dealing with to figure out ultimately what potential value implications could be. Right? And that goes for the ip, the equity, the tokens themselves across the board. That does influence things.

Neil Thakur [00:48:14]:
Right. And we see it just in traditional values, right. Like having tax components to things and how that, you know, why you would do something here in the US versus somewhere else, you know, that that's not too dissimilar. But you layer in this digital asset concept and it is like, you know, it's very difficult. Right. And you can dive into the specifics of tokens that are launched and tokens that don't exist yet and the rights to tokens. There's optionality of all that. If I have a token that we all hope, if we're launching a project, we hope to be the next Solana and, you know, etc.

Neil Thakur [00:48:53]:
But if it's not right, and it's trading on exchange at a certain value, but there's no liquidity to it, you know, is it really worth that? And if I transfer that asset to a different jurisdiction, you know, how should I be taxed on that? Right. Should I be taxed on that value? Or is there an implied kind of liquidity type of discount that is applied? There's. Those are the concepts that we're constantly kind of, you know, grappling with and, you know, understanding what the native, like, jurisdictional kind of issues are from attacks and a regulatory perspective come in quite frequently. Right. You know, can we do this? Can we apply this concept here and maybe not here? I don't know. It depends. And is it different than if I'm putting something on my balance sheet and I have to do financial statements? Are there differences there? Right. Again, a lot of valuation concepts that are constantly coming into play here.

Neil Thakur [00:49:47]:
When you start layering in an asset class that doesn't necessarily natively have like the true metrics that we're used to in terms of saying, hey, this is what it should be worth. Right? I just look on an exchange that should be it. It's not all that simple anymore.

Kyle Lawrence [00:50:02]:
No, it's a great point. And it's kind of, you know, from your perspective and from our perspective we encounter similar things in that people call us up all the time and they say, well what's the answer? Where do I set up? And there's no one size fits all. There is no one uniform jurisdiction. If there was, there'd be no need for other countries laws or us to have 50 state laws. It would just be one thing and everybody would do it. You know, it's, if it was easy, everyone would do it. And just for our listeners and viewers out there, that's really important thing that Neil is talking about is that your situation is different than your partner situation and your investor situation. And, and just because it worked for somebody else to set up a Cayman foundation, it's not going to work for you.

Kyle Lawrence [00:50:42]:
Just because somebody set up a Wyoming dao, it's not going to necessarily work for you. There are privacy concerns and taxes and all these things and, and it's probably not going to get any easier. And one thing I do want to address that I, I think you said that is very interesting in, in a sea of interesting things you've been talking about over the last, the last hour is there is still a slight hesitation for people to enter into the US not just for the tax, tax reasons we touched upon earlier, but the reality is that we have, you know, the, the, our government changes every two years effectively and right now it's very favorable and hands off and who knows what that's going to look like 14 months from now. That may not necessarily be the case. And that's not a right or left thing. It's just that you're going to have different people looking at these things. We're going to have different goals and different priorities in terms of, of what are the things they want to push forward. And I don't think that's really going to go anywhere anytime soon.

Kyle Lawrence [00:51:35]:
Yes, we have institutions and yes, I don't, I mean I don't think institutions are going to let the government take it away from them. I mean, once you give something, it's hard to take it back. That's sort of the, you know, union negotiating 101. Once it's gone, it's gone kind of thing. And I think there's an element of that in play here in the United States that'll be really fascinating to watch unfold, you know, over the next year or so.

Neil Thakur [00:51:56]:
Yeah, I think that's an excellent point. Right. And that is a big part of the concern, I think, about folks. And, yeah, especially the institution getting in this space. They're, you know, dipping their toes into it. But, yeah, the reality is like, yeah, I don't know what, you know, what the administrative kind of policies are going to be. And to your point, you know, right or left, doesn't matter. It's just like, I think the hope is that, you know, it's just so successful and the capital is so large that, you know, it is.

Neil Thakur [00:52:26]:
The cat's out of the bag. Can't. Can't go back. But that there's maybe, you know, maybe. I don't know.

Kyle Lawrence [00:52:34]:
I certainly hope so.

Neil Thakur [00:52:37]:
I'm right there with you, man. I hope we get there. But. But, yeah, it's exactly right. And that's where you're just getting back to the. Some of the things I said earlier. It's just like, that's why, ironically enough, the offshoring concept is. Is still very much alive.

Neil Thakur [00:52:54]:
Right. Because if I know what I'm dealing with there, I can let the US Market kind of play itself out, and if it works, it's great. But, yeah, we still need to figure out taxes here. Right. And we still need to figure out just the overall kind of regulatory kind of operating structure in terms of who we want to be and what these assets represent. And so. So, yeah, I think that is where we kind of are cautiously kind of hopeful and optimistic about things, but we're still kind of inching our way forward. And everyone says that we're going to have market structure by the end of the year, but now with the slowdown and everything, I don't know anymore.

Neil Thakur [00:53:38]:
Right. It was like a done deal at the Jacksonville Conference a few weeks ago, and it was like, we are there, right. And like, that is a very optimistic group of folks. And, you know, just like, you know, just the lens that I have is very different. Just because we see. We think we see things from a more of a risk kind of tolerance perspective. And so obviously, we are, you know, cautious about things. But, yeah, I mean, you know, it was onward and upward, upward to the right and all that.

Neil Thakur [00:54:10]:
And. But now here we are, unforeseen, you know, circumstances. And. And do we get there by the end of the year?

Moish Peltz [00:54:15]:
I don't know.

Neil Thakur [00:54:16]:
You know, that's.

Kyle Lawrence [00:54:17]:
Yeah, probably not. We'll See, Yeah, well, we're. We're winding down on time. Neil and I, you know, want to be respectful of your time. But any. Any final thoughts or questions for Moish, myself? You know, we always ask everybody else questions. Nobody asks us anything. Get left out.

Neil Thakur [00:54:33]:
Oh, you guys are great, man. I love. This has been fun, man. It's just. It's such a natural thing, you know, this has not been any kind of interview or any kind of open or anything like that. This has been a very. Just a natural conversation that, you know, we would have all the time in the industry. So I appreciate the opportunity to even just have it just so candidly and naturally, if you will.

Neil Thakur [00:54:55]:
And, you know, I love what you guys are doing, and it's like the lens that you guys have and the things that you're seeing. Certainly, you know, just to be able to fly on the wall in some of your conversations with some of the folks that you're talking to, I think. Very interesting, you know, but yeah, you've got the attorney client.

Moish Peltz [00:55:14]:
Yeah. Be careful what you wish for.

Kyle Lawrence [00:55:16]:
I was gonna say, yeah, if it weren't for confidentiality, we can write a great book, but sadly kept to keep it right here.

Neil Thakur [00:55:24]:
I love it. I love it. Well, I do appreciate the time today, guys. This has been very, very kind of you and, you know, I thank you for that and, you know, look forward to working together in the future. Just in general. This has been awesome.

Kyle Lawrence [00:55:39]:
The feeling is mutual.

Moish Peltz [00:55:40]:
Thank you so much. Feeling is mutual.

Kyle Lawrence [00:55:42]:
Yeah. Neil Takor, managing director of Teknos Associates. Thanks for coming by, my friend.

Neil Thakur [00:55:47]:
All right, thanks, gentlemen. Appreciate it.

Kyle Lawrence [00:55:51]:
That wraps it up for another riveting edition of Block and Order. Very special thank you to Neil Takor from Teknos Associates for stopping by and sharing his thoughts on all things design digital assets with a specialty in valuation. We work with Neil and we love his firm. Remember that everything you see on Block and Order is meant for information purposes only. Nothing is meant to be taken or construed as legal and or financial advice due to the fact that we simply mentioned various assets on this show does not mean that we endorse those assets. Please conduct your own research and consult your own representatives if you're going to take the plunge. Very special thank you not only to Neil for stopping by, but for producer Moish, who nowadays wears two hats. He's the host and producer extraordinaire.

Kyle Lawrence [00:56:33]:
So on behalf of Moish Peltz, I'm Kyle Lawrence. Take care, everybody.

Moish Peltz [00:56:38]:
See you next time.