Tom Shaughnessy, host of the 51percent Crypto Research Podcast, recently brought on the CEO of Securitize, Carlos Domingo, to discuss the future of the security token industry. Domingo made the case that we can expect 2019 to be a pivotal year for the emerging tokenized securities market.
Securitize has been making headlines in the security token space all year. Garnering major investments from Coinbase and Ripple, as well as being responsible for the first compliant security token transfer in the United States, the project has been hard at work establishing the foundations for 2019. Carlos Domingo came on air with Tom Shaughnessy of 51percent Crypto Research Podcast to discuss why his firm is taking these foundational steps in preparation for 2019.
The Forces Driving the Security Token Marketplace
There are a few aspects pushing security tokens towards tenfold expansion in 2019 according to Domingo. First is their ability to more easily allow for capital formations. As Domingo remarked:
“Financial markets are beginning to view security tokens as crowdfunding on steroids… on a global basis, investors can come from 40 to 50 jurisdictions and that’s something that traditional technology will find much more challenging.”
Security tokens thus allow for a greater pool of capital to be tapped into for projects who are looking to expand or just get their footing. The beauty of the concept is that virtually all crowdfunding efforts can be tokenized, thus allowing for increased liquidity across borders. The demand for this kind of technology is being driven by the global market itself which is becoming more and more interconnected. It’s the inevitable next step for crowdfunding.
Secondly, security tokens provide much-needed liquidity. “Everyone that is in security token space is doing it because they believe the security premiums will be there because it is liquid,” Domingo argued.
“The problem with venture capital firms today is that the capital they raise is far too small because of the illiquidity of the underlying assets.”
However, although these are the two driving forces behind the need for security tokens, there is one aspect that is often overlooked according to Domingo: automation.
“Automating of managing the life-cycle of the security [will be crucial]. Once your asset become liquid, you can reconstruct the capital in real-time. If the token is trading in multiple places, you can automate payouts, communications, proxy votes, and things like that. Typically, these are quite challenging in traditional companies.”
Thus, the necessities of new capital formations and liquidity for our current global market demands a kind of automation that only security tokens can provide. This is fundamentally why Domingo is of the opinion that 2019 will demonstrate to existing financial markets that not only are tokenized securities here to stay, but they will form an integral part of our future financial markets.
For Domingo’s full comments, be sure to check out the entire podcast.
What do you think about Domingo’s comments? Do you agree that the tokenized security market will grow by 10x in 2019 or do we need more time to set the foundations right? Let us know your thoughts in the comments below.
Image courtesy of 51percent Crypto Research.
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