Insights from the Security Tokens Realised event in London

On 23 and 24 January, Security Tokens Realised (STR) was held in London. The event brought individual investors, VC funds, tokenization projects, security token offerers and many others together to talk about security and asset tokenization.

It was one of the most serious events in the security token industry held in Europe so far. Sponsored by Tokeny and Archax (among others), attendees included a range of interesting companies. Speakers included people from SPiCE VC, CityBlock Capital, SIX Digital Exchange, 20|30, Zilliqa, DLA Piper, Finlab, ICONOMI, and many more. Although we missed certain projects such as Securitize or Neufund, the attendees were all related to security tokenization in one way or another.

As media partners of the event and writers of the SecurityToken.it newsletter, we were there as well. For specific talks, or if you want to watch the entire event, you can view all speeches from day 1, or the talks from day 2. So instead of providing a recap of the event, here are some insights into the event’s atmosphere, our impressions, and an introduction to a couple of new projects we encountered in London.

Rob Nance from CityBlock Capital (photo by Hervé Francois on Twitter)

General Impressions from SecurityTokensRealised

When walking into the conference hall, we immediately noticed a stark difference with other crypto conferences. Rather than tens of booths with projects trying to sell their ICO to you, there were just a handful of stands. Similarly, in some of the crypto conferences we’ve been to, the event was crawling with ICO founders who were pitching their ICO to anyone who would listen. In contrast, at STR, people were very approachable, and not too much in a sales mode.

In short, the atmosphere felt much more mature. This feeling got even more pronounced when talking to people, or hearing some of the presentations. With London’s financial district close by, a large part of the attendees had traditional finance backgrounds. This also made the topics of discussion to tend more towards finance.

Preaching to the Choir

And yet, Security Tokens Realised was in one way quite alike many other crypto conferences. After all, with so many people together interested in the same topic, you may expect a lot of preaching to the choir.

A slide from the Codebox presentation

And indeed, a large number of speakers included a slide in their presentation on the estimated market size of different illiquid assets that could potentially be unlocked through tokenization. In other words, many of the presenters demonstrated how big the market of tokenized securities could be. But since the crowd made up the security token industry, most attendees already knew about this potential.

Similarly, multiple presenters emphasized other benefits of tokenization, such as disintermediation, reduction of overhead, 24/7 secondary markets, and more. Of course, these aspects of tokenization are real. And it is great to use such numbers and arguments to convince ‘non-believers’ of the potential of tokenization. But for next time, we would suggest presenters to focus even more on the nitty-gritty, and foster discussion around the challenges and specific technological or regulatory solutions for tokenized securities.

Security Token Business Case panel, with people from Dots Ventures, Société Générale, ICONOMI, Autonomous Research & State Street (photo by ICONOMI)

Challenges for the Industry

As you may expect as a reader of our newsletter, the event also demonstrated the security token space is still in its infancy. Of the blockchain-focused VC funds that we spoke to, none had yet actually invested in an STO project — other than projects that make up a part of the security token infrastructure. The reason? A lack of investor education on the one hand, and a lack of appealing investment opportunities on the other.

But we do not just need educated investors, but also interested investors. As Keiretsu Capital’s founder Matthew le Merle said: “Capital is local”. Specifically for equity raises, investors want to see the company they are investing in. So although the crypto world is global, and the idea of liquidity for STOs also comes from a borderless point of view, security token projects that are looking to raise funds, will always find it easier to contact investors close by. People you can talk to (and convince) face-to-face. And perhaps this is a challenge that many security token issuers have yet to realize.

New Projects in the Asset Tokenization Space

But while you could say that the space is still in its infancy, you could also say that it’s evolving. For instance, more and more companies are ‘nichefying’, bringing tokenization to personal experience and expertise.

An example of this was the talk held by Altfin Partners, a company with a strong background in the shipping industry. Altfin Partners are planning to tokenize debt in the shipping industry, where tokenization could reduce overhead significantly (see their article on this subject).

In our view, such sector-focused companies are fundamental for the security token industry. We need people who truly know what they are doing. People who can pinpoint a specific problem that they have experienced themselves — and that know exactly why tokenization is the right solution.

Mi Sun Cho from Codechain (Photo by Sea Foam Media on Twitter)

In the same vein, we were pleasantly surprised by another project: Kodebox’s Codechain. Codechain is a purpose-built blockchain for security tokens. In her presentation, Codechain’s COO Mi Sun Cho gave a good indication of the need for such a blockchain to exist:

You have to support two things that are contradictory. Security tokens cannot be anonymous, the transactions should not be anonymous — because you have to know the kind of investors you’re dealing with. But if you put all the information of your investors on-chain, you’re disclosing everything about them, and they will not want that. So you also have to protect their private information. So there are trade-offs; you have to engineer a kind of technology that supports both things.

We could go into many other projects that we’ve encountered at Security Tokens Realised for the first time, such as institutional-grade exchange Archax or tokenized real estate Crowdlitoken. But the point is that the event was a great way to see where the industry is heading to.

Conclusion

Security Token Realised brought professionalism into this space, demonstrated the growing interest from investors in tokenization, and showcased some highly interesting (European) tokenization projects.

It also showed that for the benefits of tokenization to materialize, and for us to truly unlock value in large illiquid markets, there is still a long way to go. But it’s conferences like these that offer a brief insight into the current state of the market: and we’re certain the market is heading in the right direction.


Authors

SecurityToken.it is a weekly newsletter sent from the forefront of the security token industry. Our subscribers include over 300 crypto professionals, from venture capital firms to tokenization platforms — and some of the major players in the crypto space. Click here to subscribe.

Infloat is a research and advisory firm specializing in tokenizing businesses and developing innovative funding models. We fuse our business, financial, and blockchain know-how with market research to develop solutions for over 20 forward-thinking clients from 7 countries.