Charlie Xu is a former strategic managing director of Fenbushi Capital, China’s most active blockchain VC fund. He now acts as CEO and founder of Hashgard, a one-stop shop for the management of digital assets. Xu concluded that 2019 to be a “watershed year” for security tokens and holds that STO activity will evolve into a trillion-dollar industry by 2023.
SportsLedger has officially announced plans to launch an STO. In early 2018, the company had announced plans for an ICO, which were soon halted due to regulatory concerns. Other companies are also likely to make the transition to STOs to ensure compliant offerings. Purchasers of the SportsLedger security token will be entitled to future dividends and, in the event of the company being sold or going public, a conversion into common equity will be possible.
Even traditional businesses are launching STOs: “We already have all the technology, we have a great ice cream brand and we plan to expand all over the world. It’s very simple: people will get a percentage of sales, we planned around 2%. If you have the token, you get the royalty paid directly to you.”
Digital assets have many advantages when integrated with blockchain technology. Benefits include overall efficiency, security, and transparency. But institutional investors have displayed hesitation when it comes to entering the cryptocurrency realm. A major reason has been unclear regulatory guidance.
Security tokens are expected to account for 80% (or $4 trillion) of the total global market cap (GMP) of cryptocurrency by 2025, with trading volume of these tokens exceeding $40 trillion for the same period. Tokenized securities will be recognized as legal securities under federal law, and therefore ownership protection will exist.
With the SEC’s recent hardline stance on unregulated ICOs, security token offerings (STOs) are now the only means for cryptocurrency crowdfunding in the United States. This places a lot more prominence on tokenized securities. Recently, many stakeholders have been expressing their confidence in the emerging security token paradigm.
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LXDX, the high-speed cryptocurrency exchange founded by a former SpaceX engineer, will issue stock through a security token offering (STO). LXDX will issue 5 million tokens that collectively represent a 10 percent ownership share in the exchange and will entitle token holders to 10 percent of the exchange’s quarterly adjusted gross revenue.
Major South Korean cryptocurrency exchange Bithumb is the number one crypto exchange, with a 24-hour trade volume of $1.7 billion. Bithumb has reportedly signed a deal with an American fintech firm in an effort to open a securities token exchange in the U.S.
Harbor CEO Josh Stein discusses the overall functionality of Harbor’s R-Token and the common benefits security tokens bring to traditional finance. Through added liquidity and increased investor access, tokenized securities can bring legitimate benefits to many areas of traditional finance.
The security token offering – or STO, as it’s being called – addresses the uncertainties of ICOs while embracing the fact that tokens are indeed securities. Like ICOs, STOs provide an innovative approach to capital funding, democratizing access to both capital for startups and investment, while providing much-needed transparency...
Cryptoassets are already coming of age. With the arrival of the security token offering (STO), the crypto space is beginning to reach an uncharted level of legitimacy in the financial community. We are about to witness perhaps even more disruption in markets and society than we’ve been promised. The STO is the safe, secure, and sensible answer to the ICO.