Will The Emergence Of Digital Securities Ever Happen? How Can Crypto Tokenization Become A Reality?
STOs, or Security Token Offerings, are frequently discussed as a mechanism that could help propel blockchain adoption. Such securities are developed on the blockchain and their ownership is governed by smart contracts for real estate, debt, private equities, and fractional ownership. Given this quality, many jurisdictions are categorizing STOs as subject to regular securities regulations.
Recently, Chief Executive Officer of VStock Transfer Yoel Goldfeder stated,
“The SECs statement in the midst of the ICO boom demonstrated that technological advances cannot occur in a vacuum.”
The company takes the position that regulation will change to address the capabilities and specific qualities associated with technology, but also, that such changes will take time.
“In 2018 the technologists and players involved in the crypto space started coming to the realization that to fully realize the potential for this industry they must work within the confines of the regulatory environment.”
To date though, there has not been much activity concerning tokenized securities and some attribute this to the decline in the crypto market and regulatory vacuums in various jurisdictions.
Jamie Finn of Securitize stated,
“Capital Raising has become increasingly hard and ICOs showed a new way of raising money that was absolutely mind-blowing.”
Finn believes that investors need to be educated concerning digital securities and regulations could be a path to security ownership.
“ICOs showed how capital formation can happen but quickly poised the well as there were so many scams.”
The absence of clear regulations make it a bit difficult for STOs to establish in some regions. For instance, in the United States, the process is not clear. Another question that arises is why digital securities are important now.
Darren Marble of Issurance.com stated,
“digital securities use blockchain technology to improve transparency, streamline capital formation, and reduce fraud.”
The platform is working to fix issues concerning distribution, which it believes is one of the main problems in the industry. With the program, investors will be able to opt for pre-vetted digital securities and they can personalize deals depending on their own preferences. Finn added that digital securities provide liquidity and they are applicable to the blockchain.
Of course, there are issues concerning STOs as well. What is missing for further adoption is infrastructure. Without the right infrastructure, the asset cannot become truly liquid.
According to Juan Hernandez of OpenFinance Network,
“blockchain-based trading platforms are the missing variable in facilitating a new era of smart securities along with much-needed liquidity.”