In case 2017 and ancient 2018 were viewed as the year(s) of the ICO afterward 2019 could be the year for the STO, security token that offer, according to latest research from South Korea.
Security Tokens Still Need Regulation
First coin offerings were seen as a wonderful way to start a project by selling tokens for this from cryptocurrency, which has been mostly Ethereum. However the scammers and shysters soon reap the benefits of this relatively easy method of earning money in the behest of the uninitiated, also on the back of the wave of fomo which was gripping the digital world this time this past year.
A significant number of ICOs were revealed to become scams with fake teams and non invasive projects. That triggered a tsunami of regulatory anxiety and kick started the crypto bear market which is still continuing today.
Security exemptions may be the response as with the majority of crypto tokens they're actually backed by physical assets. They share attributes with conventional financial products like stocks, derivatives and bonds and offer a means for investors to buy a digital bet in a product by owning a crypto token endorsed by it.
CP Research added that they offer an option for assets that are hard to liquidate like property or artwork. The study noted that property and venture capital funds have already become tokenized but adoption may nevertheless be hindered in South Korea due to the current regulatory stance. According to the report, authorities still assert that cryptocurrencies along with blockchain are two different things which could be sending domestic companies overseas to launch STOs.
Coinone Research released a similar report however, had a different take on the problem stating;
"STOs which focus only on the liquidation of resources will gradually create a lemon marketplace where just worthless assets are traded. Concentrating only on the Potential for liquidation is a harmful thought,"
The warning is this type of investment practice may trigger another financial crash similar to 2008 where mortgage backed securities were issued excessively. The goal of this research was supposed to push the Korean authorities into formulating concise and clear STO regulations to be able to promote healthful investment markets.