In 2018, tokenized securities were one of the most written about topics in the cryptocurrency space. Will 2019 be the year of the security token? Mason Borda, CEO of TokenSoft, gives his thoughts.
Financial analysts have expressed optimism that 2019 just may be the year security tokens begin to form a significant sector of the blockchain space. Mason Borda, CEO of TokenSoft, shares this optimism: “we’ve seen a variety of sources predict that security tokens will represent 10% of GDP by 2024 (which equates roughly to $8 trillion).” However, are these predictions unfounded optimism or are they level-headed estimates based on real trends?
Well, the picture is much more complicated that some analysts are leading on, argues Borda in a new blogpost.
2018 Was a Year of Breakthroughs
2018 was, by any estimates, a monumental year for the tokenized security space. Now, “banks and corporations are coming to TokenSoft and [other digital security specialists] to understand how to leverage digital assets.” This is a great sign of things to come.
However, 2018 also demonstrated the limitations of the security token space as we know it today. As Borda writes:
“Those involved in the space certainly experienced the slowdown in the 2nd half of 2018… Many jumped into blockchain projects without the understanding of whether their blockchain-based instruments were securities, which would require adherence to securities regulations.”
On top of that, 2018 was also the year the SEC began to be firmer in its repercussions for those not strictly following compliance. It is a development that led to some short-term sting but was arguably badly needed.
The Trends to Look for in 2019
Borda, therefore, sees three main trends working in the security token industry’s favor in 2019.
- Larger enterprises will slowly begin to enter the tokenized security space after being largely absent in 2018.
- Issuers will clear up compliance concerns especially in the U.S., but also in other jurisdiction.
- Significant consolidation will happen on technology platforms supporting digital tokens with a few becoming the leading ones by the end of the year.
Currently, security token issuance continues to be a “high risk” endeavor. This is because you need to work with far too many parties to issue a security token, thus making it a time-consuming and very expensive process. Until this process is streamlined, we have to temper our expectations of security tokens and their short-term future.
What do you think of Mason Borda’s thoughts? Do you agree with the trends he outlines which are pushing the security token space in 2019? Let us know your thoughts in the comments.
Image courtesy of StartEngine.