People often confuse the benefits of crowdfunding and other existing market dynamics with those of security tokens. Here’s some clarity around the benefits of security tokens issued by private companies relative to the current market for private securities—plus some misconceptions surrounding security tokens.

Samsung’s Galaxy S10 phone will support a crypto wallet. There’s still no clarity on which coins would be supported, but the most dramatic effect so far has been seen in the Enjin Coin (ENJ), which is up more than 147% in a week. The coin spiked on rumors that it would partner with Samsung to become one of the first assets added and supported within the digital asset wallet.

The digital securities market suffers from the classic chicken and egg problem, where a lack of liquidity is keeping investors away from spending their capital, yet more investors are needed for liquidity to be generated. This has to do with the issue of investor accreditation, and how these old rules restrict the majority of retail investors from investment opportunities… which in turn prevents higher caliber businesses from raising capital via security token offerings.

Institutional investing giant Fidelity spends a reported $2.5 billion each year on emerging technologies including artificial intelligence and blockchain. Its digital asset branch is now live and operational—with increasing institutional investor interest despite the industry’s current bear market. Fidelity’s research suggests this pattern will only continue.

Fincross International, a digital investment bank startup, sees an immense opportunity in security tokens, according to the company's deputy chief executive and chief strategy officer. The big difference between security tokens and cryptocurrencies is the former is issued through a centralized network in a regulated market, while the latter is unregulated… And security tokens will be much bigger—and will offer more stable returns—than cryptocurrencies.

Tokenized stocks provide digitized versions of existing shares in established companies. DX.Exchange, an EU-licensed corporation that uses Nasdaq’s matching engine technology, began offering these “digital stocks” in January. Specifically, it offers Google, Tesla, and Amazon shares via a partnership with Cyprus-based MPS Marketplace Securities.

The Hong Kong-based market operator will offer tokenization services and a platform for trading security tokens, becoming the first licensed STO venue in Asia. It’s also licensed to trade cryptocurrencies and fiat currencies. The exchange is targeting both crypto-related companies planning an STO and traditional businesses seeking tokenization, achieving lower costs for companies wanting to bypass traditional exchanges.

On February 14, JP Morgan announced it would be launching a digital security called JPM Coin. The coin will be used to settle payments and transactions for the bank’s largest customers… instantly.

Token offerings have democratized startup funding, placing the sector firmly in the hands of the people. For that alone, blockchain technology has already proved itself a great leveler of the field and a means of lowering barriers. But there’s a divide at the heart of the market, and that schism lies between utility and security token models.

The regulatory picture within the U.S. becomes clearer every day, as various states outline their stances on cryptocurrencies and digital securities. Colorado, Wyoming, and Rhode Island are a few of the states leading the way with regard to blockchain regulations. Companies developing digital securities platforms want to adhere to regulations. With these new bills, growth can continue.

Stablecoins are a hot item in the blockchain world. J-Coin Pay recently announced its official launch date in Japan, which will support its own stablecoin for payments. And J.P. Morgan announced it would be releasing its own stablecoin to speed up payments across borders, especially corporate debts.

The token sale model receiving the most hype at the moment is the STO, and a quick Google search of the term will show many proclaiming 2019 to be “the year of the STO.” The main benefit of using an STO as opposed to any other type of token offering is that it operates in a space with clear regulatory frameworks that guide issuers and investors alike.