Former Visa Executive: “There’s Huge Potential in STOs”
In a recent interview, former Visa executive Roel Wolfert discussed his thoughts on the security token industry. Wolfert remains convinced of the significant potential anticipated for security tokens, but not before a few necessary developments fall into place.
How Security Tokens Have Huge Potential, but Need Further Development
Security tokens have been around since 2017. The world’s first security token, SPiCE VC, underwent the first compliant peer-to-peer transfer on a public blockchain in 2018.
Now, in 2019, the highly anticipated space continues to advance, but unarguably remains in an early stage of development.
So far, an estimated 64 Security Token Offerings (STOs) have been conducted, which accumulatively raised nearly $1 billion.
There are certainly some benefits to an STO. Wolfert says one of them is holding entities who raise funds, accountable. “There’s a lot of obligation. There’s no easy money— you can’t just disappear anymore.”
But the benefits don’t just apply to investors. According to Wolfert,
“…there’s huge potential in STOs. Rather than getting some quick money in to grow your business–it’s a marketing opportunity, it’s a communications and loyalty opportunity, as well as a great financial construct to clean up [a company’s] balance sheet and take control of your growth.”
Yet, as many in the nascent space realize, certain aspects are currently lacking. For example, added liquidity is one of the many touted advantages that security tokens bring to capital markets. But additional developments are needed for this benefit to become available. Wolfert says,
“I think they haven’t reached their full potential yet, definitely. There is very limited secondary market trading–so, from a tradability or an exchangeability aspect, I think there’s a lot to be gained.”
Another area which requires attention is a clear regulatory framework, especially concerning international transactions. According to Wolfert,
“International regulation from the EU [makes it] pretty clear how to deal with it. But then you still have people from the US buying security tokens from European companies in Europe–how will that be sorted out with the SEC, and that sort of thing?”
Overall, Wolfert is certainly optimistic. But there are definitely some aspects of the emerging technology that simply need to be hashed out:
“There are a lot of problems to be solved–or opportunities to be taken, so to speak. So, we’re not there yet, definitely. We need to get more clarity about how much you can raise, what the conditions are in which you can raise…the amount of money for retail investors versus business investors, or commercial and professional investors.”
What do you think of Wolfert’s thoughts on the security token industry? Let us know what you think in the comments section below.
Image courtesy of CoinRivet.