There was a lively opinion piece posted recently on Bloomberg discussing what kind of future security tokens could bring and why most projects today seem to be largely pitching their wares to the rich. The article argues that STOS will prove to be a new, lasting approach to finance.
The security token space has been plagued by persistent problems: not only is there compliance confusion, but information on the space is lacking and most projects do not seem to be prepared for the long-term. However, despite this, STOs are still expected to be the “next hot crypto thing.”
As Olga Karif of Bloomberg writes, ICOs used to be the crypto obsession, raising some $21 billion in 2018. But now, that is quickly changing.
Investors Should Still Worry
Putting your funds in a new venture is always risky. This is especially important to keep in mind considering the fact that not many places yet trade security tokens.
This has given rise, however, to a whole new breed of cryptocurrency exchanges which specialize in tokenized securities. For example, “Templum, Polymath, and tZERO” have launched successfully. Spice VC’s own venture Securitize also has a handful of startups which will ease security token trading.
The driving force between this momentous market move in the crypto space is the regulatory problem. With most cryptocurrencies today being considered securities in terms of U.S. law, things have gotten a bit murkier since mid-2018. Security tokens have come in to fill this gap.
However, although some argue that security tokens would open up the investor pool, regulatory issues still mean that only “accredited” investors will be able to participate. And this will likely largely include the already-wealthy, who already have liquidity to start with. The benefits of tokenized securities could really fall flat if this continues.
Although there’s still far more questions than answers when it comes to security tokens, Olga Kharif still leaves us with the impression that the space is moving somewhere concrete in the near future.
Be sure to read the full article for her complete thoughts.
How soon will the token security space ease investor worries? WIll it ever be a “safe” market? Let us know your thoughts in the comments.
Image courtesy of Bloomberg.