Innovating on the right side of the law       

Digital technologies move so quickly, that industry outsiders often struggle to keep up. This is true for everything from cybersecurity (the Cybercrimes Act was only promulgated in 2020) to digital privacy (the Protection of Personal Information Act only came into effect in 2021). And it’s certainly true for the blockchain-supported space in which Mesh operates.

“We have a lot of new technology,” says Mesh MD Connie Bloem. “And often when we speak to issuers and investors in the market about this new technology, they can find it quite intimidating. But Mesh is a fully regulated financial services provider, and we take our responsibility seriously in every jurisdiction in which we operate.”

In line with that, in July 2024 South Africa’s Financial Sector Conduct Authority (FSCA) awarded Mesh a Crypto Asset Service Provider (CASP) licence. Mesh is the first fully licensed issuance platform in Africa to tokenise financial assets. 

From a legal and regulatory standpoint, Mesh’s primary and secondary market assets are both cutting-edge and deeply rooted in established legal practices and precedents. “In the regulatory world, the Mesh framework stands almost as a work of art,” Bloem says.

Regulators are – and must be – deeply knowledgeable around the latest developments in the industry. The blockchain and smart asset spaces are no different.

“When we were applying for our Category I and Category II licences, we had an on-site visit from a FSCA delegation,” Bloem says. “They were very thorough in the questions they asked, touching not only on Mesh’s corporate structure and business model but also on the corporate governance and risk management checks and balances we have in place to protect our clients. We covered everything you can imagine – and the scope of the questions they asked demonstrated their depth of knowledge of this nascent sector. Mesh was able to answer every one of those questions comfortably.”

“When we enter any jurisdiction, we always ensure that we are fully compliant with all the local regulations,” says Bloem. “We are a global company, and we understand the importance of creating protection for our issuers, investors, and our own shareholders. That’s why we’ve built our marketplace in line with the highest regulatory standards that exist in the global capital markets, we will always ensure first and foremost that Mesh is compliant with those standards.”

Mesh is headquartered in the Netherlands and has offices in South Africa, so its team is distributed globally. As Bloem emphasises, Mesh has a profound responsibility to comply with regulations in every jurisdiction in which it operates.

“All the countries in which we operate benefit from this higher level of transparency, as well as the legal and regulatory rigour that we work under,” says Bloem. “It ensures that, regardless of which country our clients are in, or which investor or issuer we deal with, we can always assure them that we are a trusted and trustworthy platform, operating to the highest regulatory standards.”

Bloem explains: “In South Africa for example, when a company issues a primary market asset on Mesh in the form of an offer to the public, the law requires that they register a Prospectus with CIPC. CIPC runs a stringent set of tests to ensure that the company is sound, that it has submitted everything in respect of financial statements, the use of proceeds, whether there is a guarantor or underwriter, how investors will be protected and what recourse they will have if coupons are not paid on time, and so on.

“Although Mesh is built on the blockchain, as the issuance platform and marketplace, we ensure our clients comply with the full set of requirements that govern how the issuance is facilitated.”

Bloem explains. “Every note or share or other class of smart asset that is issued on Mesh is securely certified on the blockchain, and that certificate is in the investor’s custody and their immutable proof of ownership. So while  in Mesh’s case, this information is drafted in the language of tokens, it is nonetheless in full compliance with the law.”