There have been significant leaps n bounds evident in the Cryptospace over the past 18 months in the form of ICOS (Inital Coin Offerings).Raising whopping $6.3 billion raised in the first quarter alone of 2018 and surpassing the complete efforts of 2017.
Although the problem with ICOs isn’t just that many of them are scams — it’s also that many of the utility tokens offered are actually securities. As a result, they are violating the securities law in the U.S and consequently received the attention of the SEC. In July 2017, the Securities and Exchange Commission (SEC) released a report stating that certain tokens were eligible to be classed as securities, and would, therefore, be subject to regulation. Jay Clayton (The Agency’s Chairman), told a Senate hearing in February, “every ICO I’ve seen is a security.” So the natural progression of this dilemma is where decentralization of Cryptocurrency is forced to finally meet the “real world”. This collision of the 2 worlds was inevitable in order for digital currencies to progress one step closer to mass adoption – causing the birth of the Security Token Offerings (STO).
So what is a Security Token (Stoken)? A Stoken is one that has been backed by external, tradable assets. One of the main applications of security tokens is that they grant companies with the ability to issue tokens that represent shares of company stock. They are the natural bridge between the Traditional Finance sector and the Blockchain Technology, complementing each other aswell. The ability to tokenize all assets, improve liquidity, allow for 24/7 Trading and widen the doors of the global market is a game changer to say the least. This is a significant moment in Financial history that will certainly disrupt traditional ways and remove alot of the no longer required middlemen.
Polymath is leading the way in Stoken Projects – being the first ever Launch Pad. It will be a fully functional marketplace where token issuers and token investors will be able to connect. Their securities token protocol embeds regulatory requirements into the tokens. These tokens will only be available to verified participants. As it stands, there are only a few stokens in existence. It is likely that this is largely down to the difficulty of launching one. Polymath will simplify the process allowing financial companies to create and issue their own tokenized securities smoothly. The platform will open up the blockchain to legally-compliant securities offerings and provide users with a decentralized protocol to simplify trading of stokens.
As we progress into 2018, it is likely that the SEC will continue to ramp up their enforcement and continue their crackdown on non-compliant ICOs. Following this crackdown, it is becoming increasingly likely that stokens will soon become the next Crypto advancement. So watch this space as it is very likely that this will be the year that we witness tokenized securities really take off. Let us know your thoughts on Stokens 🙂