Security Token Offerings: Restoring the Trust in Blockchain Projects
An estimated $5 billion was raised using Initial Coin Offerings (ICO’s) during the first half of 2018. ICO’s allowed companies to raise capital without giving away any of their equity or control and instead contributors were given ‘tokens’. A large number of projects repeatedly over promised and under delivered, if they delivered anything at all. In addition, many of these tokens are considered securities and as such, fall under regulatory laws. Many of these projects turned out to be nothing more than ‘exit scams’ with the sole intention of duping investors into parting with as much money as possible. Others simply failed due to lack of experience, funding and or a multitude of other factors.
It is therefore not surprising to see institutions such as the Securities and Exchange Commision (SEC) in the United States zero in on these ICO’s. We saw a lot of action taken against ICOs by the SEC for alleged fraud and this is continuing into 2019, with more dominos set to fall. Needless to say, this has created a degree of distrust in the global investment community.
The purpose of regulatory bodies like the SEC, is to stop harm coming to investors from no fault of their own. Out of the ashes of ICO’s emerged Security Token Offerings (STO’s), which has paved the way for regulators to monitor the fundraising process more closely and ensure that companies are following securities laws per their jurisdiction. Securities can offer legal rights such as voting or revenue distribution in some cases and ensure that companies are disclosing certain levels of information that are important for investor knowledge.
STO’s are emerging as the new, compliant fundraising vehicle for blockchain projects. STO’s are being welcomed by the crypto community as the path to mainstream adoption. The regulation and transparency offered by STO’s provides credibility and confidence in blockchain investments for investors and projects alike.
STO’s can help restore trust in the space, and address the need of appropriate regulation, creating a positive relationship between SEC and the cryptocurrency world and leading to a new era where technological advancement and investor security can both co-exist.
When planning to fundraise for your blockchain project or concept, it is vital to ensure that you are compliant and aligned with government regulations. There is a limited network of experts who know the challenges — and solutions — that blockchain companies face. Blockchain Agility is diligent in adhering to compliance funding, structuring, compensation and offerings to remove any barriers to growth for our clients. We help ensure that your project is legally compliant and aligned with government regulation across multiple jurisdictions.
Who is Blockchain Agility?
Blockchain Agility is the premier solution for the full range of services to help you launch a successful tokenized project. Working alongside you, we build the roadmap from vision through monetization. From strategic marketing to meeting regulatory compliance, Blockchain Agility has you covered.
In addition, we recruit the industry’s best talent and tailor solutions to our clients’ full-time, contractor and strategic needs.