Security Token Offerings (STOs) Look to Become ICO 2.0 as the Next Wave in the Crypto World
Initial coin offerings are in the crosshairs of legislation globally. Most of the time, the legislation has negative consequences for ICOs. As a result, some projects are moving into the STO space.
Security Token Offerings (STOs) could be the future due to the targeting of ICOs by regulators. This is because most regulators are still not buying token generation events. Besides that, they do not agree with (SAFTs) simple agreements for future tokens. The chairman of CoinShares that believes STOs are the future.
He made the comments at a panel organized by MarketWatch and Financial News. The chairman said that the Bitcoin had brought it a new age for value transfer. The Ethereum network brought the second wave. According to him, the third wave will be by the STOs.
CoinShares is the company that backs the XBT Provider Bitcoin and Ethereum Traded Notes (ETNs). ETN trading in the US was suspended because of the lack of clarity between ETNs and exchange-traded funds.
The Untapped Value of Private Assets
Some of the biggest companies globally are in private hands. A good example is Cargill, which is estimated to be worth over $109 billion. There is also Koch Industries, worth about $100 billion. Most of these companies love the freedom that being private offers them. However, if they did join the capital markets, their value would skyrocket.
Besides these huge companies, there are many other assets held privately. For instance, there are stamps, gold, classic cars, and numerous art pieces. These assets could be tokenized and their value unleashed. This could open up the world of private equity to the masses. According to him, most financial institutions will not be able to escape tokenization.
What is Going on With ICOs
ICOs will be faced out by regulation and STOs will take over. What caused this issue? In the past two years, ICOs have enjoyed a lot of success. They made it possible for anyone with good coding skills to access funding worth millions of dollars.
In 2015, it was estimated that ICOs managed to raise $13.3 billion. This is a huge success by any estimate. However, in 2018, that has changed, investors have faced major losses. Most projects have ended up being worthless and so have their tokens.
Most ICOs focused on how to get capital but did not have plans on how to deploy it. In essence, people gave money to project founders but had no control over how their money would be spent. Besides that, they had no claim to shares of the company.
The Future in STOs
Authorities have begun to clamp down hard on ICOs. As a result, most investors no longer sink their money in them. The most successful STO thus far is the tZERO project, which raised $134 million to establish a trading platform. STOs will give investors control over a project. They will also ensure that projects are not established just to fleece investors.