By Anayat Durrani
With the EB-5 Reform and Integrity Act (RIA) of 2022 came many changes to the EB-5 program. A significant change was the addition of more transparency measures, such as having new commercial enterprises retain a third-party fund administrator. New Commercial Enterprises (NCEs) are required to have an outside fund administrator track investor funds to monitor that the funds are properly handled by banks. In response to the new requirements, one firm called PRXY has developed a unique cutting-edge service designed to streamline the process for fund administrators and project stakeholders.
“Our proprietary PRXY software and fund administration ecosystem work in sync to maximize a project’s accuracy, transparency, and accountability while delivering a streamlined experience to our customers and peace of mind to their project stakeholders,” says Connor Irish, co-founder and Chief Executive Officer of PRXY Co.
The platform was created specifically to respond to the new statutory requirements of the RIA, says Preston Pesek, Chief Operating Officer at PRXY Co, with a mission to “simplify the often-cumbersome legal compliance requirements of using EB-5 capital.”
HOW BLOCKCHAIN TECHNOLOGY CAN HELP EB-5 STAKEHOLDERS
PRXY was developed by real estate and finance professionals, EB-5 attorneys, investment advisors, and Web3 experts to create a more efficient platform for EB-5 stakeholders. PRXY’s software tracks all transactions in the EB-5 project and gives EB-5 investors a real-time view of project metrics. PRXY uses blockchain technology to achieve these goals.
“I think an important first step is to clarify or demystify what blockchain technology is,” says Irish. “At a fundamental level, blockchain technology is simply a precisely accurate, immutable ledger of transactions or activities. The individuals making those transactions or performing those activities need specific access keys to interact with each other, and those activities are then recorded on chain.”
Irish says when they saw the audit trail requirements of the RIA, they knew blockchain was the best tool to give project actors a place “to perpetuate the flow of capital from the EB-5 fund to the EB-5 project and automatically record that storyline with the highest fidelity possible.”
HOW PRXY WAS LAUNCHED IN THE EB-5 INDUSTRY
The company’s founding team comes from within the EB-5 community and is represented by Irish, formerly a real estate development attorney, and co-founder Samuel Newbold, who is a practicing immigration attorney specializing in EB-5.
“Consistently, our platform is the town square for the flow of funds, and all transactions have the equivalent of digital fingerprints,” says Irish. “Administrators and our clients also have real-time access to this ledger together with useful data exhaust metrics such as estimated job creation, percentage to budget, alignment with the business plan, etc., all included automatically.”
The RIA requires that a fund administrator be a third-party professional such as an attorney, a Registered Investment Adviser, a broker-dealer, or a CPA and be independent of the EB-5 fund, the regional center, and investment advisors. The role of the fund administrator includes everything from handling financial paperwork to monitoring the funds’ adherence to regulatory requirements.
“As far as we know, we are the first to use blockchain in this way for construction projects in general, and we are certainly the only platform provider offering this new technology to EB-5 investors and stakeholders,” says Irish.
INNOVATIVE RESPONSE TO RIA’S EB-5 REQUIREMENTS
While the company was created to specifically respond to the RIA, Pesek says PRXY’s mission goes well beyond just checking the boxes for compliance.
“We are committed to making software products that deliver a feeling of hospitality, service, and ease of use for our customers,” says Pesek.
The company states that investors can access the user-friendly interface to gain “precise, current, and accurate project milestone data” through the PRXY ledger channel via their personal devices and a simple click of a button. This includes access to capital stack silos, line-item expenditure tracking, job creation analytics, percentage to budget, and more, per the company website.
“Working with PRXY comes with the additional benefits of having inroads into a tight-knit community of specialists and career experts who focus solely on EB-5,” says Pesek. “We aspire to be a “super-connector” in the EB-5 industry, and we hope that our presence within our small community continues to improve and expand the broader ecosystem worldwide.”
EB5Investors.com Staff
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