10 Reasons why STO (Security Token Offering) Will Become Huge Investment vehicle

In 2017 the world learned about initial coin offerings (ICO) as the start-ups began raising capital in a new and innovative way. In 2017 and 2018 more than $14 billion as invested through ICOs in Blockchain companies as investors were eager to cash in on the crypto craze. The companies too held this as a new, less complicated and expensive way to raise capitals.

Since 2018 the ICO market has gone all but bust, but the legacy of the new crowdfunded investing model will become a mainstay for many companies who will enter into legitimate raises in the future.  More start-ups will look to tokenize real assets and leverage the power of the crowd to finance their next project. The new regulation put in place by the U.S. Securities and Exchange Commission (SEC), has deemed all crypto assets except Ethereum and Bitcoin as securities for all projects seeking exposure in the U.S. Market.

The SEC has stated that it does not differentiate between so0called utility tokens and security tokens. All token offerings must comply with federal securities laws. Hence, the new investing vehicle the Security Token Offering (STO).

10 Reason why the STO will change then investment ecosystem

High-quality, compliant cryptocurrencies are a sought after commodity. Early STO investors will become a new breed of investors. As with early bitcoin and crypto investors they will have most to gain.

  1. STO Credibility

    STOs that follow federal guidelines and are approved by the SEC will become instantly credible. Furthermore, this will take more of the grunt work investors will face in evaluating the projects or the companies.

  2. Legitimizing crypto investing

    Increased regulation and credibility will help to end much of the stigma around cryptocurrencies among traditional investors. STO investors are banking on more than just institutional investors and look beyond bitcoin futures and custodial services.

  3. Micro-investments

    The main attraction of ICOs was the low barrier to entry relative to other capital markets. STOs could take micro-investing mainstream and allow more people to participate and invest in Start-Up ventures that were previously restricted to institutional, VCs and Accredited investors.

  4. Crypto as a Security

    Platforms like tZero will become more popular and familiar and help deliver new regulated STOs for trading. This will mean cryptocurrencies will be traded lie a security, giving STO investors ownership, voting and asset allocation rights. This could mean STOs being included in tax-free savings and retirement accounts.

  5. Ownership of Security

    Whereas the “utility tokens” were delivered as future access to a product or service, a security token represents actual ownership of and underlying asset. If you invest in a real estate STO, you will actually hold shares in a physical property rather than an IOU for a future date.

  6. Programmable Ownership and Compliance

    Security Tokens are programmable by nature, this ensure compliance protocols can be embedded into actual assets and amended over time. ICOs did not have this level of sophistication

  7. High Success Rate

    Most of the ICOs have gone bust or are in the process of going out of business. The early track record for STOs has been extremely positive. STOs currently have a 99% success rate. ICOs were merely pipe dreams based on white papers. STOs have something real to offer investors.

  8. Low Fees for STO Investors

    Blockchain technology reduced the need of expensive middle-men and those savings will be passed on to STO investors. The emergence of the low-fee investing will serve to strengthen the STO model with its programmable compliance and ownership features.

  9. Decentralized assets remain decentralized

    As the SEC has already noted, regulation impacting security token offerings have no bearing on assets that are “sufficiently decentralized”, such as Bitcoin and Ethereum. The truth is decentralized money is here to stay and more confidence in in cryptocurrency investing will become the norm among investors of all kinds.

  10. Increases Innovation

    A regulated investment ecosystem for tokenization will open the door for greater adoption and, ultimately, new innovations in the Blockchain arena. A more innovative environment means more investment opportunities and increased returns for STO investors. This trend is already underway as more start ups and institutions continue to utilize and develop more decentralized ledgers.

STO investor
The Security Token Offering Investor Outlook

The days of the ICO are gone, but STOs are an offshoot of the ICO just a more regulated compliant and better investment alternative.  The new paradigm will affect every industry and from standard issuance of stocks and bonds to smaller assets like business shares and real estate.

There is a lot for the STO investor to be bullish about in the future. Security Token Offerings will become more accepted and adapted. Blockchain projects are in their infancy and with companies like Facebook launching their cryptocurrency now is the time for serious investors to look at STO.