Today we are going to have some fun.
As analysts and asset managers, we generally like to make some pretty outrageous statements that can be backed up by facts and data to support our arguments, investment decisions etc. etc..
This time we want to mix it up. We are going to toss out the ‘facts’ and ‘data’ part so that we can just stick purely to ‘outrageous predictions.’
Some of these predictions are shot from the hip, nonetheless, we can’t help but to follow our gut.
4 Outrageous Predictions for STO’s in 2020
1. Tokenized Securities (TS) will be bigger than Security Tokens (ST)
Participants both inside and outside of the ecosystem have a really hard time at telling these two apart.
In brief, Tokenized Securities are ‘the wrapping of a traditional and usually ‘tradable’ financial products into a token.’ This assists with operation efficiency, raising of capital and increasing liquidity. (Think of it as tokenizing AAPL shares).
Security Tokens, on the other hand, are ‘the creation of a new product that is backed by a particular asset.’ (Think of it as tokenizing a startup).
Judging by the interest we are seeing from larger institutions, banks and sovereign entities, the former is going to gain much more adoption, more liquidity and significantly more interest from institutional players by the year 2020. This — we have no doubt about.
2. The first successful asset-backed token will be based on fractionalizing the ownership of a huge private tech-company or existing close-ended tech-fund.
You heard it here first.
How cool would it be to have secondary market liquidity for SpaceX, AirBnB or Sequoia? The concept of this completely changes the mechanics of venture capital and private market funding. No more pressure for IPO, no more huge costs and best of all, liquidity and the ability to participate from the market globally.
From our point of view, we see this type of offering as revolutionizing the investment market in almost all asset classes. It’s going to take one awesome company to get the trend moving.
3. Most existing ICO exchanges will fail in moving across to Security Tokens
The world of crypto-exchanges in their current form are still very much stuck in the days of the wild-west. With non-existent KYC and AML, questionable security practices and a general disregard for regulation, any player that tries to move will likely fail.
In addition to this, those larger crypto exchanges that do well (Binance), likely wont take the legal and credibility risk to expand to such a complex and heavily regulated asset class for fear of contamination in their existing business.
The exchanges that ‘make it’ in the security-token world will be from traditional roots, work close with government and avoid the gun-slinging mentality that ICO’s are so very accustomed to.
4. Arthur Hayes (owner of Bitmex) will be a top contender for owning the ST/TS exchange market.
Love him or hate him, Arthur is one of the smoothest operators out there. The profitability of Bitmex alone (we believe) makes it one of the most valuable companies across the industry.
In a recent interview Arthur mentions his latest investment into a private company that is going to offer the trading of equities through tokenization. Furthermore, in a recent press release, it has become apparent that Bitmex has invested in an exchange that is licensed in the Phillipines. Our recent coverage on the surge of exchanges incorporated in CEZA leads us to wild speculation that Arthur is getting his ducks in a row to make a grand entrance into securities trading via cryptocurrency.
(BTW, we don’t consider Bitmex a run-of-the-mill ICO exchange as we refer to in Prediction #3).
If there is one contender that shows an insane ability to execute — it is Arthur.
That completes our outrageous predictions for the Security Token market.
Disclaimer : We could be totally wrong.
STO’s in 60 seconds
Security Tokens Reach Non-Accredited US Investors As Holding Periods For Some Assets Expire On OpenFinance Network. As of mid-May 2019, OpenFinance Network is set to allow non-accredited, US-based investors to access security tokens in Q2 2019. Read more…
OpenLTV To Launch Security Token Offering (STO) Featuring Tokenized Debt In Summer 2019. OpenLTV has announced an upcoming Security Token Offering (STO), which is scheduled to commence in the summer of 2019. The offering will feature tokenized real estate debt powered by the Ethereum blockchain. Read more…
TradeCloud Launches Its Security Token Offering (STO). TradeCloud have announced the launch of the private round of their Swiss based Security Token Offering; having cleared all regulatory and legal hurdles. Read more…
Swarm 2.0 Goes Live. The highly anticipated Swarm 2.0 update went active this month. The update pushes the platform’s already impressive open-infrastructure a step further. Now, businesses can issue security tokens on multiple blockchains at reduced rates. Read more…