Security Tokens: a Wave of the Future

[Goodcat49]

Initial Coin Offerings (ICOs) were victims of their own success. As cryptocurrencies took the world by storm, and innovative startups raised hundreds of millions of dollars via ICOs, scammers and con artists took notice, and abused the model. The market quickly became oversaturated with nonsensical and downright fraudulent blockchain solutions that damaged the public’s trust in the model and choked out quality projects.

Instead of developing clever utility tokens, many of the sketchy ICOs were essentially offering unregistered securities, which quickly caught the eye of the United States Securities and Exchange Commission (SEC) and other regulatory authorities across the globe. Careful scrutiny from regulators petrified even the most reputable ICO projects, terrified of landing in hot water as government bodies failed to understand the nature of utility tokens.   

Blockchain companies needed to go back to the drawing board before they could conduct further token issuances.   

The solution that emerged was Security Token Offerings (STOs). STOs are cryptographic tokens fully compliant with securities laws, giving token holders a stake in the issuing entity. Security token owners are entitled to such benefits as profit-sharing, voting rights, and the ability to trade their holdings on exchanges.   

While the infrastructure to support security tokens is still being built out, STOs offer a promising solution for both startups seeking to tap into a new investor pool and savvy investors looking to trade in a new hyper-efficient security ecosystem. That is, as long as STOs don’t fall victim to the same mistakes ICOs made.   

Read the details in the article of Coinidol dot com, the world blockchain news outlet: https://coinidol.com/security-tokens-wave-of-future/