New Crypto Projects Eye Security Token Offerings More as ICOs Come Under Regulators’ Scrutiny

ICOs were all the rage in 2017 and early 2018. Since then, regulatory agencies have cracked down on them because of the many that were scams.

With the regulators favoring security token offerings (STOs), startups are now beginning to adopt them as a means of raising funds for their projects. According to the Financial Times, startups are now boycotting ICOs and choosing to go with regulated STOs. And it’s not just in the US.

Startups all over the world are opting for regulated offerings, particularly in Asia where there’s been a significant crackdown on ICOs. In fact, countries like Hong Kong and China have explicitly forbidden ICOs.

In the past, blockchain and crypto startups did everything they could to ensure that their offerings weren’t similar to traditional securities. Unfortunately, those days are long gone. Most firms are now seeking out regulated options for their coin offerings, with many activities going the route of STOs.

Security Token Offerings (STOs) are different from ICOs in the sense that it affords investors the opportunity to directly invest in the company. STOs are essentially like IPOs, only it’s for the blockchain industry.

This is in direct contrast to ICOs which mostly gave investors stakes in products. Which means their returns were largely tied to the product’s performance. So, a failed product often meant the loss of investment, even if the company was afloat. Lena Ng, Partner at Clifford Chance puts it succinctly:

“With ICOs, we saw people trying very hard to fall outside of the regulated space… STOs are clearly subject to regulation.”

Because of the crackdown, therefore, the industry has seen a significant increase in the number of STO inquiries in 2019, with many of those companies actively considering launching theirs.

Unfortunately, STOs aren’t as cheap to launch as ICOs. Which makes them a tough thing to do for startups with very limited budgets. The beauty of ICOs was the significant lack of costs, speed of execution (ICOs can be launched within days) and ease of fundraising.

But, with STOs, startups need a sizable legal team to help them navigate the landscape. And even then, the process could still take time.

As a result, STOs may not be an option for startups with low budgets for now. However, with time, and streamlined processes, STOs are likely to become the industry standard.

Till then, startups looking to raise funds will have to brave the waters and pony up the costs or seek funding elsewhere.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Bitcoin Exchange Guide News Team
B.E.G. Editorial Team is a gracious group of giving cryptocurrency advocates and blockchain believers who want to ensure we do our part in spreading digital currency awareness and adoption. We are a team of over forty individuals all working as a collective whole to produce around the clock daily news, reviews and insights regarding all major coin updates, token announcements and new releases. Make sure to read our editorial policies and follow us on Twitter, Join us in Telegram. Stay tuned. #bitcoin

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer


Please enter your comment!
Please enter your name here


Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

VeChain Joins China Animal Health and Food Safety Alliance (CAFA)

VeChain has joined the China Animal Health and Food Safety Alliance (CAFA) as one of its council members and will be providing them technical...

Coinbase Pro to Pass the Rising Network Fees Onto The Customer During Withdrawals

The launch of UNI, the governance token of Uniswap DEX, is having a big impact on the Ethereum network. The good thing is the price...

Homeland Security Calls On Freelancers to Design A Digital Wallet Interface; $25k to Finalists

The Science and Technology Directorate (S&T) division of the US Department of Homeland Security has allocated up to $25,000 in prizes as an...

BoE Explores Negative Rates; Bitcoin Is A ‘Must' Because Fiat is a ‘Giant Ponzi Scheme'

The Bank of England (BoE) is exploring negative interest rates now and in response Sterling weakened sharply. The pound dropped 0.7% against the dollar after...

Nexus Mutual Sees Active Cover Growing 10x, Now Token Price ‘Directly Linked to Adoption'

“DeFi is developing faster than you can say ‘protect me from the risks in DeFi’,” said Kayleigh Petrie, Director of Engagement at Nexus Mutual,...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today