In an environment filled with uncertainty, ICOs have to evolve and take it upon themselves to be self-regulatory to attract real institutional investors. Regulators want to protect investors and investors want their assets tradeable. The solution? Security Token Offerings.
In order to bridge the gap between traditional financial markets and crypto markets, there needs to be some establishment of securities in the crypto sphere.
What would tokenized securities look like, however? They would enable the ownership of said token, allow it to be transferable over a blockchain, and they would be legally bound with federal security regulations.
In short, tokenized securities would allow the for innovation of cryptocurrencies and blockchain but would also come with the safety and backing of traditional finance.
A New Class of Platforms
Naturally, with the emergence of tokenized securities, there must be platforms that cater to this need. Desico, for one, is one such platform that is launching next year for Security Token Offerings (STOs). Desico already boasts some strong backers such as the Ministry of the Economy and the Central Bank of Lithuania. Lithuania is a unique case in the realm of STOs because they are the first country to pass a law that would effectively legalize this kind of offering in Europe.
Mayra Ceja, Director of ICOs and Equity at Indiegogo, told Forbes that:
“The future of security tokens is going to be big. I think it unlocks a tremendous amount of capital and opportunity to be able to achieve liquidity a little bit faster, so you’re actually getting a lot of interest from fully established businesses that can use the blockchain to raise additional capital much faster.”
The Legality of STOs
Currently, Lithuania is the only nation that provides a legal framework for STOs. However, according to Neysan Rassekh, the CEO of Blockchain Government Affairs, the framework for this kind of law in the United States is a long time coming.
Existing securities laws will inevitably be applied to tokens. And for those that aren’t deemed securities? They will be regulated under classic anti-money laundering, anti-fraud, and other measures. So either way, the space will have oversight.
Frankly, if 2017 was the year of the “utility token,” then in 2018 we must have realized what a mistake this model was. 2019 then should be the year where, finally, tokenized securities become realized and are commonplace.
Do you think 2019 will be the year of STOs and security tokens? Let us know in the comments your thoughts.
Image courtesy of Crypto News Asia.