Indiegogo Crowdfunder to Allow Companies to Create Crypto Tokens as Securities
Crowdfunding Platform Indiegogo Lets Company Issue New Cryptos Classed As Securities
It looks like the popular crowdfunding site Indiegogo is expanding its business to allow cryptocurrency companies to sell new assets like security tokens. This new service of the company is currently hosting a sale of tokens from St Regis, a luxury ski resort in Aspen, Colorado. The cryptocurrencies are being issued by a real estate investment trust called Aspen Digital.
Indiegogo started into the Initial Coin Offering (ICO) market back in December. Back then, the company let startups sell their digital tokens in exchange for ETH or BTC. While this is still a small portion of the company’s business, the co-founder of Indiegogo, Slava Rubin, stated that the firm is hoping to see this market growing more and will offer more if there is demand in the market.
According to Rubin, the company has been working with the blockchain for a while now. They decided to do it because the original vision of Indiegogo is to democratize the access to capital and to bring investments to all the types of people in America and around the world. As the blockchain is decentralized and it works over a network composed of several computers, it can be a way to do it.
At the moment, the firm is working together with a brokerage startup company called Templum to offer the option to also release security tokens for their companies. These securities will be Aspen Coins, securities which can be acquired for the first time directly via Indiegogo.
The whole process will be quite similar to the popular ICOs, except by being more regulated and using another name. Regulatory provisions, Indiegogo’s CEO believes, are important to give safety for the users. Indiegogo already had an equity platform before, which was also created in 2018. It is part of a major partnership with MicroVentures.
However, the main service of the company is still certainly the crowdfunding business, which has been popular for more than a decade since the inception of the site. Kickstarter, a younger, but more successful company has raised about $3.85 billion USD until now while Indiegogo has raised a fair amount of $1.5 billion USD, less than the rival, but a worthy sum indeed.
About Security Tokens
Security tokens are a trend in the crypto industry. While they were somewhat common during the ICO craze last year, most of them were not called security tokens and were not regulated by any governmental agency like the U. S. Securities and Exchange Commission (SEC).
As the market is facing more scrutiny and regulation at the moment, security tokens are becoming more common these days. They are digital financial assets pegged by stocks, bonds, real estate or something like this to avoid the volatility of the crypto market. These assets also grant a stake in the ownership or in the profits of the companies sometimes.
The main issue with these assets is less how to do them and a lot more about how the regulators will respond to these assets. There is still not a lot of certainty in this area and things are changing very fast, so this adds some considerable risk to the equation.
ICOs, in particular, have been targeted by the U. S. SEC for their high potential for fraud as many of them were actually scams last year. The SEC has recently decided in June that if a centralized third party or sponsor oversees the tokens, it is likely to be a security and not a utility token like Bitcoin, for instance. In this case, Templum is the third party.
If a token is a security, the investors have more legal protection for their assets, which is not granted when they are investing in other currencies. Security tokens are only available for accredited traders in the United States.