Security Token offerings: The 2018 Trend Of The Crypto Boom.

6 min readJul 4, 2018

Security Token Offerings Registration at an all time high

ETF RUMOUR

If an ETF is approved by the US Securities and SEC, anyone with a 401K, IRA, or an investment account with brokers can easily invest in the bitcoin market. The ETF could add 30 million investors and add $400 billion in market cap.

Furthermore, enhanced regulatory clarity will also lead to the growth of security tokens. Security tokens tokenize the ownership of real-world assets such as company shares and real-estate, allowing them to be traded on the blockchain.

Indeed, while the last two years have seen crypto funds post incredible gains, the space is still in its infancy. As the fog of regulation begins to clear and security tokens come online, we can expect to see the crypto fund industry reach even greater heights.

There will be tons of other crypto products coming to the market if SEC does approve the first cryptocurrency ETF

What have we seen in the past? And why STO’s are the next big trend

The NASDAQ dot com bubble (Facebook, Amazon, Myspace, Google shares) were all registered securities within the constraints of the SEC. This pushed the dotcom bubble market capitalization to a high of 9+ trillion.

The funds were predominately from U.S investments (institutional investments)

Crypto is a global movement and evolution of money. But there are little institutional investments yet? Why?

Because there are no legal, secure and official/registered ways to invest. This is a segue to my next points, the influx and tsunami of the Security Token offering.

Through Reg A+, Reg D the most common registration. The “Wall Street” money will start to enter Cryptocurrency in a legal and compliant manner.

We had the Bitcoin Boom, The ICO Boom and now its time for the STO boom, through ETF’s, pension funds and security token asset backed products.

How do we know this?

Retail money isn’t sufficient to pass $1 trillion in market cap and the market now feels heavily burdened with bearish sentiment and lots of strong resistance from the superficially high price levels of $15,000-$20,000 per BTC.

Alt coins won’t see a rally till Bitcoin builds up steam and finds new highs, then we can begin the famous “alt season” where the real gains are made. During the sideways consolidation period at the top of bitcoin’s next run.

As a security, (Facebook, Amazon, Google,) Institutional investments reached an all time high of $9+ trillion market capitalization from predominately U.S investors alone. Crypto is a global evolution of programmable money where as the NASDAQ are search engines, e-commerce and social media sites. Therefore crypto through these instruments of STO’s and the new standard will see likes of an influx and tsunami of wall street money transferring into this market legally and securely. Its not a matter of if, its when.

We’re at the Early Adopters Line at just after 13.5%

The Next Wave of STO tokens and ETF

This wave of investments is a evolutionary vehicle for institutional investments (pension funds, ETFs, banks, insurance companies, pensions, hedge funds, REITs, investment advisors, endowments, and mutual funds)

We need these hedge funds, mutual funds purchasing security token’s rather than ordinary cryptocurrency to reach $6 trillion market capitalisation as seen in the NASDAQ bubble.

Circle, which recently acquired cryptocurrency exchange Poloniex, has revealed that it will pursue registration as a broker-dealer and alternative trading system (ATS) with the Securities and Exchange Commission (SEC) and may ultimately pursue a banking license.

Fidelity is “quietly building a cryptocurrency exchange” which currently manages $2.4 trillion in assets, has been planning the initiative for approximately one year.

Novogratz told reporters that the global cryptocurrency market is headed towards a $20 trillion valuation. Blockchain Reminiscent of Dot Com Mania

“[Cryptocurrency] is a global revolution. The internet bubble was only a U.S. thing. It was rich U.S. people participating. [Cryptocurrency] is global. There are kids in Bangladesh buying coins. It is monstrous in Tokyo, in South Korea, in China, in India, and in Russia. We’ve got a global market and a global mania. This will feel like a bubble when we’re at $20 trillion.”

AND

“It won’t go there ($20 trillion) right away. What is going to happen is, one of these intrepid pension funds, somebody who is a market leader, is going to say, you know what? We’ve got custody, Goldman Sachs is involved, Bloomberg has an index I can track my performance against, and they’re going to buy. And all of the sudden, the second guy buys. The same FOMO that you saw in retail [will be demonstrated by institutional investors].”

“A lot of folks on the institutional side are on-boarding, and getting their ducks in the row.”Month over month, Circle says, it had a 30 percent increase in new institutional clients and was doing 15 times more transaction volume per day from a year ago. Meanwhile, the price of bitcoin fell roughly 20 percent in May.

”Despite bitcoin‘s plunge last month, Goldman Sachs-backed start-up Circle had a big uptick in hedge funds and other big league investors joining its digital currency trading platform.

Challenges, limitations and drawbacks:

Smaller Investor Pools: due to the accredited investor requirements, limits on then umber of US investors, reduce the size of investor pool that a company can ultimately sell their tokens to initially. INITIALLY a significantly smaller market than ICO’s.

Lockup Periods: No more “FLIPPING” ico’s — with Security token offerings lockups for one year in which you cannot sell. Which brings to mind the question of opportunity cost.

Limited Speculation

utility token 10x gain versus a security token backed by a real asset that’ll likely trade close to net asset value, many investors still prefer the utility token upside.

The speculation is what drives the big gains and volatility, especially retail investors. While this is positive in the long run.

The change is You don’t park your money in Bitcoin anymore — you pool it in a Real Estate investment, as long as its a good investment. Or in a limited partnership share.

Being Too Early is the Same as Being Wrong:

Security tokens are a logical gateway to bring traditional investors into the world of cryptoassets, however, it’s still very early in that process. Many people in the crypto community are still confused by the tokenization of securities — just imagine offering a security token as an investment to a family office outside of the space. There’s significant room for improvement when it comes to education, custodian services, UI/UX of STO solutions — the list goes on.

While I believe that the tokenization of securities has tremendous potential, many people are overlooking the difficulties of selling these tokens to investors today. For the time being, I believe that the supply of security tokens will be much greater than the existing demand for them.

I’ll leave this post with a hot tip for anyone considering the launch of their own STO. Just because you’re tokenizing a security, doesn’t mean more demand will be automagically generated. The value of the security is ultimately in the asset it represents (equity, profit share, real estate) — not the fact that it’s on the blockchain

Current Market and has anyone actually undergone a security token offering?

Brickblock — is an actual working product tokenized real estate, ETFs, CoinFunds and Platforms.

So what do we do!? How do we capitalize on this emerging trend. How do i buy Security Token Offerings or Polymath?

If you believe that security token’s are the next wave and key trend. Then purchase Polymath or other STO-20 protocol platform tokens that emerge as they are compared to the Ethereum of security tokens.

The $$ raised to produce other STO’s raised that run on polymath’s platform will cause it to increase in value because they must purchase POLY to participate in the other STO’s — I’m in no way endorsed by Polymath and am only writing on personal opinion.