Tokenized Securities Need A Platform In Order To Take Markets By Storm
A new company named DESICO is making significant strides in the area of tokenized securities, with the development of their trading and investing platform. 2017 saw an unbelievable outbreak of exuberance for Initial Coin Offerings (ICOs). Unfortunately this exuberance was met with many examples of fraud and lack of regulation, making it difficult to trust investments in the crypto space at current. DESICO looks to match the right level of regulation, with the benefits of tokenization and blockchain.
DESICO is “the first blockchain venture amongst competitors that offers an end-to-end solution to issue and trade Tokenized Securities”.
Surprisingly, 2018 thus far has seen a greater amount of ICO investing than 2017, which is remarkable considering 2018 has mostly been a bear market for the crypto space. In fact, the first quarter of 2018 alone saw $6.3 billion raised from ICOs (118% of that which was raised in 2017).
Such exuberance shows a positive future for this type of crowdfunding. However, investing in ICOs can still pose significant risk to investors. There are still very loose guidelines for the ICO market, with many stories of ICO exit scams and fraud. 19% of 1,450 ICOs that were reviewed had signs of “plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams”.
Tokenized securities have started to attract more attention over the past several months. One crucial piece to the tokenized securities puzzle however, is the aspect of a trading and investing platform that is properly regulated and ready to handle all that comes with the world of tokenized securities. DESICO fits this need.
In short, the DESICO team “will build an end-to-end infrastructure to issue and trade Tokenized Securities in full compliance with the EU member state law”.
DESICO is based in Paris, and in Vilnius, the capital of Lithuania (European Union/Eurozone member state), which surprisingly achieved the third most ICO capital raised in quarter 1 of 2018, with the U.S. and China having the first and second most capital raised. As for those who question DESICO’s choice of location, the team responds by stating that “several Fintechs (e.g. Revolut) are operating with licences out of Lithuania for EU passporting reasons”.
DESICO’s choice of location also shouldn’t be too concerning when taking into account the fact that their whole operation has the goal of legal compliance and safety for investors and involved parties.
There are several core beliefs held by the DESICO team, which have fueled their platform development. “ICOs lack investor protection (no real shareholders rights, misleading information by ICO issuers, lack of transparency post-ICO, scammers, fraudulent entrepreneurs)” and “ICOs face all sorts of frictions: a) difficulty to interact with the conventional banking system, b) difficulty in being listed on crypto-exchanges”.
The cryptocurrency space shows much promise and potential, but is currently limited by the aforementioned lack of security and legal certainty. Many investors are waiting for a solution like DESICO, before they become involved in the crypto and blockchain industry.
DESICO looks to appeal to three types of customers in specific.
- Startups that wish to issue Tokenized Securities in full compliance with the law.
- Investors looking for a safe, transparent, and secure way to invest in Tokenized Securities.
- Traders who wish to trade Tokenized Securities on the DESICO ecosystem “in the secondary market (Tokenized Securities exchange)”.
DESICO operations will be regulated by the Bank of Lithuania, which is under supervision of the European Central Bank. DESICO will operate under three licenses: a crowdfunding license, financial brokerage license, and European E-money license (for fiat/crypto payment system).
DESICO is definitely a breath of fresh air when it comes to the crypto space, and all the uncertainty and regulatory issues. A company that is aiming for proper compliance to further interest in the cryptocurrency space could be exactly what this market needs at this point in time.