Institutions Jumping on the STO Bandwagon: Why?

Security Token Offerings (STO) became somewhat of a hot topic for discussion in the second part of 2018. Perhaps one of the reasons for this is the gradual fade of initial coin offerings (ICO) which, for the most part, turned out to be more of a get-rich-quick scheme rather than solid fundraising models which provides an alternative to the crippling slow and oftentimes unaccessible VC model.

In any case, STOs quickly managed to prove their worth, mostly because they manage to solve a lot of the issues of the stock market while, at the same time, fit within regulatory frameworks, unlike their earlier counterparts, the ICOs.

STOs provide an array of benefits for the investors, as well as for the business owners. These include, but are not limited to the following:

• Lower barrier to entry for investors
• Greater flexibility for the business owner
• Ability to attract global investors
• Compliance
• Fractional ownership
• Relatively quick fundraising model

As such, it’s no wonder that several jurisdictions across the world have already jumped on the STO bandwagon.

Institutions Are Getting on Board

Switzerland has long been trying to create a rather friendly and welcoming regulatory environment for the Fintech and, subsequently, the cryptocurrency industry and its proponents.

However, the country’s stock exchange — Switzerland Stock Exchange (SIX), has come upfront, officially announcing that it wants to own its very own STO. This became clear after the institution’s Chairman — Romeo Lacher, said that SIX will launch its own Digital Currency Exchange platform dubbed SDX, while also starting with its very own STO “sometime in H2 of 2019.”

Another major development on the front are from Thailand earlier in February. The country’s National Legislative Assembly has reportedly approved an essential amendment to its currently existing Securities and Exchange Act. The alteration is carried out on February 8th, as the Bangkok Post reports. As soon as the changes come into effect, it will be entirely legal for businesses to launch their very own security token offerings with the use of blockchain technology. In terms of how the tokens will be regulated, the Deputy Secretary-General at Thailand’s SEC, said that it would depend on the rights and obligations which are associated with the security tokens.

Going further, more good news on the subject of tokenized digital assets came from one of the hubs in Southeast Asia — Singapore. The country’s de-facto central bank — the Monetary Authority of Singapore (MAS), teamed up with marquee proponents in the tech industry such as Deloitte, NASDAQ, and Anquan, in order to develop solutions geared for simultaneous exchange, as well as final settlement of digital currencies and security tokens.

STOs Attract Serious Companies

Unlike ICOs, amid the boom of which we saw shell companies and whitepaper-based projects raise millions, STOs paint a completely different picture.

STOs are traditionally organized by reliable companies with well-established and developed structures which are seeking additional funding for different arms and initiatives.

An example of that is the upcoming STO Blueshare. Blueshares are security tokens, underlined by the shares of Interprom OOD. This is one of the largest and significant construction companies in the EU country Bulgaria. It comes with 23 years of experienced, renowned team of experts, international reputation, and perfectly devised structure. Despite having successfully completed major infrastructural projects, the company is also continuously diversifying.

As such, for the last 5 years, it has been investing actively in exploration activities for natural resources. It has secured mining exploration concessions which are worth more than US$ 4.3 billion. In addition, the company has an indicative upwards of US$ 26.7 billion in potential forthcoming mining opportunities with a focus on Gold, Silver, Zinc, Copper, and Lead.

Investors will be able to benefit from the increasing value of the company’s shares, which will be immediately reflected onto the Blueshares, as well as from all the benefits associated with security tokens.

But this aside, it’s also quite obvious that major institutions are not only approving of the concept of STOs — they are launching their own. SIX is a prime example.

Do you think STOs represent a viable alternative to traditional fundraising models? Share your thoughts down below.