Security Token Offerings, Initial Coin Offerings Are Not Fundamentally Different, PwC’s Strategy& Affirms

Security Token Offerings (STOs) are very popular at the moment, which coincides with the fact that Initial Coin Offerings (ICOs) aren’t so popular anymore. Now, a new report made by Strategy&, a subsidiary of PwC, one of the big four audit firms, has affirmed that ICOs and STOs are not that different at all.

The research, which was made with help from the Swiss Crypto Valley Association, affirms that there is simply no fundamental difference between ICOs and STOs. The latter ones are known to be more “mature and regulated” ways of getting funds, especially as they determine that their tokens are securities, but that the differences are not so big in the end.

However, it seems like it is more a question of marketing and branding because of the fact that neither ICOs nor STOs are actually set in stone and they can be different in several ways. Both of them have low barriers of entry, and fundamental characteristics of private equity fundraisers like Know Your Customer (KYC) regulation, for instance.

The main difference would really be that STOs know that they are securities and are more clear with that when many ICOs claimed that they were selling utility tokens when they were actually dealing with securities.

Both STOs and ICOs have declined in sales, though. They are down since the second half of 2018, mostly because of the effect from the so-called crypto winter, which causes prices to be pushed downward.

Research Showed That Almost a Third of The Money Raised in 2018 Went to Only Two Projects: EOS and Telegram

There is also a certain centralization of funds in this market. A total of $19.7 billion USD from 1,132 token fundraisers was achieved in 2018, but almost a third of this money $5.8 billion USD, came from only two ICOs.

The largest ICO was the one from the EOS Foundation, the largest one in history, which raised over $4 billion USD, and the other one was from Telegram, which raised $1.7 billion USD.

What this trend shows is that having a big name is still very important in order to get a big amount of money on such a fundraiser.

Commodities Are Being Tokenized

The final trend that was found out by the study is that commodities such as gold and oil are being tokenized in order to serve the digital market. Intellectual property is also being tokenized as well and it looks like the process will only get bigger with time.

In any case, the STO and ICO market seems to be slowly diminishing with time. A trend that is linked to the market conditions, however, as well as the disappointment from many investors who lost money in 2017 or at the beginning of 2018. Because of this, we expect the market to grow again as soon as the next bull run starts.

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Gabriel Machado
Brazilian journalist who is interested in the future of the financial world. Has a special interest in the blockchain technology and the global financial markets. Covers economic and technology news with a focus on the fintech industry and has been writing about the cryptocurrency market since the start of 2017.

[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


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