Crypto Baskets: Investing in Security Tokens

Crypto coins and crypto tokens both are types of cryptocurrency. Where coins operate on an independent blockchain, with their own set of rules (like Bitcoin, Ethereum), tokens are built on top of an existing platform,(like Ethereum, Stellar), and they further add their own rules and functions to an existing platform. Tokens are of two types: utility tokens and security tokens.


What are Security Tokens

Simply put, security tokens are the legally compliant tokenization of anything that can be expected to give profits. It could be stocks, bonds, assets, real estate, companies, and investments that produce dividends. Issued to investors in a token sale or security token offering (STO) in exchange for their money. These tokens pay dividends, share profits, pay interest or invest in other tokens or assets to generate profits. Sale of such tokens is permitted only after meeting the SEC compliance, in the US.

In recent time, many security tokens have been launched without the knowledge of US SEC and this led the US government to crack down on such unregulated ICOs or token sales in order to protect the investors. If you plan to launch your ICO as a ‘security token’, you will need to abide by the rules of SEC.

Check out this recent news, where US SEC director of corporate finance said that the transactions involving the ethereum token aren’t subject to federal securities, bringing huge relief to Ether investors.

What is the need of security tokens?

Imagine a scenario, where you would want to invest in a physical property, but you do not have enough liquidity to the buy the entire property. Now, if you were given a platform using which you can invest in a property, anywhere, as per your liquidity, and you can sell just your part of the investment, for profit, anytime. The platform or system that enables to do this is by security tokens. Currently, there are a lot of assets that are centralized (bonds or properties), or require high transactional fees (IPOs), or require high liquidity to invest in. With Security tokens these trades would be swift, cheap, transparent, decentralized and 24/7 tradeable. Apart from the above highlighted sectors, security tokens will be a doorway for exciting new investment opportunities, which will help tokenize a plethora of new opportunities. From upcoming albums, movies to a wide range of professional services, we will be able to tokenize everything that promises a profit in future and generate revenue in form of dividends, payouts and token price appreciation.

A Crypto basket of Security Tokens

Here is a list of security tokens that can be a part of your portfolio at Palettes, a swift and hassle-free way to invest in crypto.

Polymath

Polymath cryptocurrency is intended to go about as an interface between between financial securities and blockchain. Utilizing Polymath will permit the blockchain to be opened up to legally-compliant securities offerings. It has a privacy module to validate investor identity and accreditation status, before they can participate in a security token offering (STO). In a way, it helps regulatory bodies across the world to better understand and manage cryptocurrency regulations.

The tokens are compatible with the ERC20 standard. The crypto whose ticker symbol is POLY enforces government compliance.

Propelled in 2017, Polymath has pulled the attention of financial market players around the globe especially those who aim to merge the securities domain and blockchain technology.

Securitize

Securitize provides an end-to-end platform for issuers to tokenize resources like finances, an organization, property or some other genuine type of assets.The organization gives a few administrations including building up the legal and administrative availability of the issuers and their legal team, streamlining investor enlistment in consistence with KYC/AML accreditation or other legal requirements, modifying smart contracts to coordinate issuers’ extraordinary prerequisites and security token information all through the lifetime of the security.

Harbor

Harbor is a blockchain platform outlined unequivocally to dispatch security tokens and help them follow the current administrative structure.

It empowers traditional investment classes to immigrate seamlessly onto the blockchain. Utilizing an institutionalized procedure, Harbor ensure that the companies that are migrating their assets comply with the legal requirements. The standard incorporates KYC/AML, tax rules, reporting information, and accreditation status necessities into each new token figured through the framework. Harbor has raised a private ICO which accommodates for a Reg D-compliant private sale, combined with a new token permissioning technology, the R-Token.

Swarm

Launched in January 2018, Swarm allows tokenized assets to be offered as investment opportunities. Swarm uses the SRC20 protocol, a cryptographic standard for security tokens to tokenize real-world assets. These tokenized assets then can be easily managed, governed and traded on the Swarm network.

SWARM is a platform where users can invest their cryptocurrency assets such as SWM, BTC, and ETH (and soon, fiat) into real world assets and receive SRC20 tokens in return. They are also granted ownership and governance rights, a legally enforceable right to any revenue the asset generates, and the ability to trade the tokens in a regulatory compliant manner. You can invest in multiple asset classes like, agriculture, renewables, tech companies, real estate, crypto hedge funds, impact investments (development projects and post-disaster rebuilding), infrastructure etc.

This ends our list of the possible top security tokens which will be a part of our crypto index you can invest in using Palettes. Use Palettes to invest intelligently in weighted crypto portfolios, from the comfort of your own trusted exchange account.

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