The Security Token Market in 2019
In 2018, it became painfully apparent after a study was released claiming 80% of ICOs conducted in 2017 were scams, that ICOs needed some kind of regulation or solution to protect those investing in them. Thus STOs were born.
STO, or Security Token Offering is the regulated alternative to the ICO. Basically, a company can raise funds through token sales by having the financial security that backs the token. This way there is some degree of regulatory protection to protect investors from investing in low-quality or fraudulent projects.
Security tokens became the talk of the town in 2018 after a slew of ICO scams left crypto enthusiasts in doubt as to the future of the market. According to inwara, security token offerings are picking up where ICOs started tapering off. Meaning that the thought is STOs will eventually replace ICOs. October 2018 saw the highest number of STOs being registered according to inwara data.
According to Money Morning, security token offerings could reach $10 trillion by 2020, which may seem like too grand of a number to be believable, but it could be a possibility sometime in the future (but probably not in such a short amount of time). While it may be too soon to start predicting what heights STOs will reach, nobody can deny that the security token revolution has arrived and is ready to take over the market.
STOs need to be bought and exchanged on security token exchanges, of which there are only several at the time being. Here is a list of some of them:
There are also specific regions that are currently capable of STO regulation and those are:
- The United States (Regulation D, Regulation A+, or Regulation S)
- The European Union (EU’s pan-European securities laws)
- Switzerland
- Singapore (local securities laws)
- Hong Kong
It can be posited that the possibility of regulation combined with investment transparency could result in rapid market growth worldwide, boosting STOs to the top of the preferred investment list.
SERVICES FOR SECURITY TOKENS
Just like with ICOs, many companies are offering their services to STOs. Services like:
KYC — This is the process of knowing your customer (KYC), and it is what businesses do to verify the identity of their clients before or during the time they do business with them. The term KYC can also refer to the regulated bank practices that are likewise used to verify clients’ identities.
Legal advisory — Legal services are provided to help structure the offerings as well as stay compliant with the regulatory framework of a particular country or region as each has its own regulatory rules to follow.
Platform/help with the launch — Helping with token creation and issuing. These services can help customize the token features according to a unique business model as well as comply with regulations. Security tokens have built-in rules which allow only eligible investors to purchase the tokens. Issuers will have a dashboard to monitor relevant offering information.
Marketing — Services to help come up with as well as execute a marketing strategy for the security token offering.
Investment attraction — Investment attraction is maybe the most important part of the STO because how else do you expect to make money? Services to help with attracting and securing investors are also available.
Listing — The listing process can sometimes be a long and confusing process. It’s for this reason that many services will offer help with listing so that your token has the best chance of attracting investors and, ultimately, survival.
If you’re about to carry out an STO, it’s one hundred percent recommended that you find a company or agency to help you carry out that process so you can reach maximum utility and profits. With this kind of help, you can get your project funded, and up-and-running at a faster pace because of the wealth of knowledge in these areas that these companies have. So don’t fail your token before it even has a chance! STOs have a lot of promise and yours could help build the future.
Here at AssetRush, we believe in the bright future of the STO, which is why we offer all of the services mentioned above.
