The team behind the Automotive eXchange Token (AXT) believes that security tokens will reign supreme over utility tokens and probably soon

Today we’re going to talk about security tokens and the Automotive eXchange Token (AXT), the security token being issued by DASHUB Inc. and AXP Inc. But before we do that, please read the following paragraph:

I’d like to add a disclaimer. We’ve gone to great lengths to secure our legal team and advisory board. And given the current climate surrounding blockchain projects, cryptocurrencies, US securities regulations, and ICOs in general, it’s important to note that our official website (https://axt.io) and official White Paper (linked via the website) remain the only official sources of information about this project. This article, and other articles released by this publication are for entertainment purposes only. Thanks for understanding.

I’m hearing a lot about security token offerings. What is a security token?

I think the easiest way to talk about security tokens is to also talk about the more common type of token called a “utility token” and compare them. Essentially, a utility token’s value is derived by its ability to perform functions on the platform it’s being developed for. A security token’s value is derived from the asset or assets that its associated with, for instance: a business’s profits, a house, rights to dividends, or some other sort of asset that has tradable value.

At this point you may be reading this and thinking, “well, aren’t most of the tokens issued during ICOs called utility tokens, and aren’t people making a lot of money speculating on them on token exchanges? Seems their value is also derived from this activity.” I would say that is a good observation. Yes, utility tokens are traded on exchanges and this speculation can have profound impacts on the token’s value (but analysts have also seen that this movement is often in line with Bitcoin’s value, but that is a whole different conversation). In the United States the U.S. Securities and Exchange Commission, more commonly known as the SEC, is the official body charged with regulating the nature and trade of securities. As stated on their website, “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” Up until recently, the vast majority of utility token trades have been untouched by the SEC, but experts expect this to change, perhaps dramatically in the near future. This is probably largely due to the types of comments and positions coming from the SEC, such as the one claiming online platforms trading digital assets must register as security exchanges.

The SEC isn’t clear on exactly what it’s going to do with utility tokens or security tokens, but many experts believes that security tokens will probably end up winning the day as they will have an easier time fitting into the regulatory climate in the United States.

Instead of using the term ICO when issuing a security token, projects are starting to use the term STO, or “security token offering”.

Is the Automotive eXchange Token (AXT) a security token or a utility token?

The team will be issuing AXT as a security token. We’re working extremely hard to follow the guidelines available to us and we believe that going down this road with the AXT token as a security token is the correct long-term play. However, since we’re developing a blockchain-based project called the Automotive eXchange Platform (AXP) it is highly likely that we will need one or more utility tokens at some point in the future. It is also possible that at some point in the future the AXT security token might need to be swapped for a different type of token (with the same name). This is because the AXT security token is slated to be an ERC20 token and in the future will need to operate on the AXP’s own blockchain (if it’s built) which we’re currently referring to as the AXTchain (but that’s a working title).

So what does this mean ICOs and STOs moving forward?

In my opinion, the landscape shifting from utility-token-favored to security-token-favored is a good thing, because securities are much easier to understand, are currently regulated, and investors have some protections. Unfortunately it goes without saying that many ICOs in the last few years dealing with utility tokens were not legitimate and were able to go largely undetected and investors had little recourse because of the lack of regulation and support from an official body like the SEC. But I don’t just say that this shift towards security tokens is a good thing because of fraud prevention. I also believe this is the case because the security token will allow companies to innovate with offerings to raise capital and operate businesses based on a type of digital asset that might allow them to deal in fractions of an asset in a peer-to-peer way, which is essentially impossible right now.

Thanks for reading our article about security tokens! It’s not the last time we’re going to talk about this topic as we feel it has the potential to be revolutionary.

If you’re interested in learning more about DASHUB, or browsing their inventory, visit www.dashub.com.

If you’re interested in the team’s blockchain-based platform and supporting token sale, visit their token site at https://axt.io.