How security and utility tokens will be traded on the Azbit platform

Azbit
Azbit
Sep 4, 2018 · 3 min read

At present, the financial regulators in most countries distinguish two main types of token: utility and security. Unfortunately, it is not always easy to determine which category a particular token belongs to. How tokens are distributed and used directly depends on their classification. If this is incorrect or debatable, this can threaten the entire project issuing the token.

What are security tokens, and how will Azbit handle them?

Security tokens are the cryptocurrency equivalent of company stocks or bonds, and confer on their holders the right to investment interests. This may be ownership interest in a legal entity, equity interest, a share of profits, status as a creditor or lender, and so on. The value of security tokens is secured by the external assets of the company issuing them.

In 2017, the US Securities and Exchange Commission (SEC) gave its official assessment of security tokens. According to the SEC, such tokens should be subject to the same rules as ordinary company stocks in an IPO. All security token issuers in the US must undergo registration.

“Crypto capitalist” Anthony Pompliano, formerly head of growth at Facebook and Snapchat and now Managing Partner at Full Tilt Capital, has outlined the advantages of security tokens:

“When Security Tokens are done correctly, they don’t skirt laws & regulations, they remove financial institutions and middlemen. This is because Security Tokens are subject to federal securities regulations — they are compliant from day one .”

In 2018, governments worldwide will continue to strengthen regulation of the cryptocurrency market. Consequently, it makes much more sense today to issue officially registered security tokens that guarantee investors’ rights and comply with all the regulators’ rules and requirements. Such ICO projects will enjoy stable development, without the risk of falling subject to prohibitions and restrictions in the future.

Azbit’s American division will host a module licensed to operate as an Alternative Trading System (ATS). This module will enable trading in promising assets such as security tokens. Users wanting access to its features will have to undergo an extensive KYC process, as the ATS’s operations will be fully subject to the control of US regulators.
What are utility tokens, and how will Azbit handle them?

Utility tokens give their orders access to certain services or apps offered by the platform issuing them. An obvious example of such tokens is the well-known cryptocurrency Ether, which is used for development and launching decentralized apps on the Ethereum platform.

In most countries, there is almost no regulation of utility tokens. At the same time, many tokens declared to be utility tokens are used to speculate and earn, and have all the features of securities or security tokens. Accordingly, such tokens and the projects issuing them have drawn scrutiny from regulators.

At the same time, most cryptocurrency users today need services allowing them to work with utility tokens under less strict regulations. Accordingly, the first stage in implementing our ecosystem’s features will be the launch of a crypto exchange.
To this end, Azbit is establishing a subsidiary with its jurisdiction outside the EU. This will host an investment platform and a cryptocurrency exchange without fiat support for utility token trading.

The more favorable regulations will allow the functionality to be implemented, and the platform launched, significantly more quickly. This will make it possible to start earning even before the main, regulated platform has been fully launched.

_______________________________________________________________
Telegrambitcointalkyoutubetwitterinstagramfacebook

Azbit

Written by

Social Trading Platform💱Blockchain Banking 📈Investment Platform 💳Electronic Payments 🌍 azbit.com

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade