Experts have predicted that in the next 10 years, security tokens could become a multi-trillion dollar market. Security tokens are showing prominence and have already generated interest from crypto enthusiasts.
Security tokens are now being perceived as worthy alternatives to ICOS and investors are exploring the substitute. And the crackdown of ICOs in 2018 by regulatory bodies is helping. Even major companies like Coinbase and Nasdaq have started organizing forays into the STO space.
In 2019, there is no doubt crackdown on ICOs wont stop. While the SEC is raiding ICOs, Security tokens offer an alternative, not just for the time being but for a time lasting. Below are some reasons why the STO space will expand in 2019.
They Offer Intrinsic Value
While utility tokens offer a representation of future access to a product or service, Security tokens represent an interest in equity, dividends, profit sharing, voting rights among other benefits holders enjoy.
The tokens do represent legal ownership on the intrinsic value of the company that is issuing them. To the owner of the tokens, they are of significant value.
They Are Offered In Transparency
STO’s allows investors to access information about issuers with complete visibility on what has been given, promised or even encumbered.
Goals of a governed security is to provide for healthy capital formations, to insulate investors from error and external fraud and to enlist compliance control to maintain fairness and order.
STO’s framework by design is fully immutable and transparent. And this has heightened its positive perception among crypto investors as the trade is in line with regulators.
Compliance To Regulatory Frameworks
The fact that they are in compliance with the regulatory frameworks makes the STO space attractive even to sophisticated investors.
Compliance issues with ICOs has dominated 2017 crypto narratives. Numerous legal actions have been taken by the commission against ICO tokens. For STOs however, compliance has dissolved issues experienced by ICOs.
The benefit of this compliance has put companies on a leading advantage against their competitors who come in late.
STOs Have A Recovery Feature
We are all aware of the dangers of losing access to wallets that are holding the virtual asset. The absence of recovery features has been an impediment of assets in the investment areas.
STOs that have been properly constructed are capable of recirculating tokens to investors. Nevertheless, the execution of benefits like these is subject to checks, balances and confirmations.
In general, this feature is yet another benefit that has enabled regulatory compliance and a reason why STO will become big in 2019.
STOs Emphasis of KYC/AML Protocols
The design of STOs incorporates the Know Your Customer and Anti-Money Laundering protocols and eases compliance.
It may be straightforward in the mainstream exchange environment but in a distributed ledger, where addresses are anonymous, it can be quite a task. The merge of the AML protocol in its design thus enables the ability to track and ensure compliance with set regulations.
These are among the most compelling reasons why traders are slowly shifting from ICOs to STOs. The security token is slowly taking shape and 2019 is the base year for the growing security token space.