Security Token Offerings Will Rise Faster With Fresh Investor Accreditation Laws Updates
As many of our readers already know, security tokens were one of the most hyped financial offerings to come out from within the crypto space over the past 14 months or so.
However, as things stand, a number of accreditation laws are keeping these unique offerings from gaining the mainstream traction that they truly deserve.
So What Exactly is an STO?
In their most basic sense, we can think of security tokens are being “investment contracts that provide individuals with recognized ownership of a physical or digital asset”. The assets in question can include a number of unique commodities such as:
- Real estate properties
- ETFs etc
STO holders can also trade their tokens for a number of other valuable assets. Not only that, these offerings can also be used as collateral for procuring a loan, or be used for the facilitation of significant value transfers between two or more investors.
Last but not least, we also have to realize that security tokens have been able to attract so much attention recently because they have the power to change how we conventionally define asset ownership.
Lopsided Investor Accreditation Laws Are Hampering STO Adoption
Even though there continues to remain a lot of optimism surrounding security tokens, a number of recent reports seem to suggest that since the start of 2019, many new laws have come into effect that make these digital offerings quite risky to acquire.
To be more specific, we can see that a wide array of archaic investor accreditation rules that continue to exist till today are preventing a large number of retail investors from accessing this domain.
Other Key Points to Bear in Mind
- To purchase crypto assets, all one needs is a digital wallet. However, in the case of security tokens, the investor needs to be certified by the SEC before making a purchase.
- Accredited investors are defined as persons who possess a net worth of at least $1,000,000, or have earned an income of at least $200K for two years running.
- The above mentioned rules clearly suggest that ”only people with significant amounts of money should be afforded the right to make risky investments”. However, as ridiculous as this logic may sound, it continues to persist till date.
The main issue with classifying accreditation solely on an individual’s wealth is that it severely restricts the most potentially profitable investment opportunities to those who already have a lot of money.
More About STO’s
- Security tokens have been able to grab a lot of eyeballs since the beginning of last year as they allow for “limitless investment opportunities for everyone” regardless of their annual income or savings.
- They are a perfect fundraising avenue for anyone associated with the retail market.