Institutional Investors Are Making Big Bets On Tokenized Securities in Crypto Market
The crypto market and initial coin offerings (ICOs) have exposed a grey area for regulatory efforts in the United States. ICOs must emerge to become self-regulatory, in order to improve the crypto market and become lucrative to institutional investors. It’s not uncommon to find that the bulk of companies selling utility tokens don’t have token economics. Consequently, most listed utility tokens are not real utility tokens, but rather, these companies are actually selling security tokens.
As a result, many institutional investors have been bearish on this new market. For example, securities acquired by investors in private companies cannot be easily exchanged into currency without significant time and effort. Security tokens aim to solve the problems faced by security token investors and utility token regulation.
Tokenized securities permit the ownership of token transference over blockchain technology so that tokens can be viewed as “digital assets.” Anthony Pompliano pictures tokenized securities as, “digital assets subject to federal security regulations. In other words, they are the junction of digital assets (tokens) with traditional financial products — a new technology improving old things.” Thus tokenized securities provide the innovation of blockchain, matched with the backing and safety that comes with traditional finance.
While many U.S. citizens are opening bank accounts in numerous countries to invest in ICOs abroad, Europe now has Desico, a platform for investing in tokenized securities. The company is leveraging a new Lithuanian crowdfunding law and regulatory framework to issue legally compliant security tokens in the EU, creating access for retail investors to participate in these investments globally.
Rewards-based crowdfunding startups like Indiegogo and Kickstarter were launched when the US passed a law of permission. Mayra Ceja, Director of ICOs and Equity at Indiegogo, states, “The future of security tokens is going to be big.” She continues, “I think it unlocks a tremendous amount of capital and opportunity to be able to achieve liquidity a little bit faster, so you’re actually getting a lot of interest from fully established businesses that can use the blockchain to raise additional capital much faster.”