The Crypto-space is Changing
Initial coin offerings (ICO’s) may no longer be a viable means for securing capital. For that reason, many companies are now adopting more financially traditional ways of getting money through the door. One way is by utilizing Security Tokens. Before we begin, let’s give a quick security token defintion:
Security Token Meaning:
A security token means a digital representation of traditional securities
Security Token Offerings (STO’s) are the more responsible cousin of the ICO (Initial Coin Offering). They are backed by discernible means such as company assets, profits, or revenue. With STO’s, companies can allow potential investors to purchase tokens which then can be sold, traded, or held. By providing credibility, the STO model has gained popularity among companies looking to attract investors in a more trustworthy manner.
On the investor side, the approachability factor of an STO is much higher than an ICO, which may translate into a stable flow of investor money. This too brings money into the crypto-space as a whole.
According to Polymath any STO’s that launch on their network will receive guidance through the often confusing and complex process of becoming completely KYC and AML compliant.
It’s All About Trust
The push for more transparency through regulation could be a good thing overall. More trust and less risk mean more investors can enter the crypto space.
STO’s may be promising for potential growth, but this may come at a cost. Being in full compliance with regulations means playing by a different set of rules, rules that are not defined by the companies themselves but by regulatory bodies. By effectively bypassing decentralization, STO’s seem to be more appropriately at home in the centralized financial world than in the crypto space.
Whether you are a supporter of decentralization or not, STO’s offer yet another methodology in the continuing evolution and understanding of the crypto space. As this space develops, more and more give and take will take emerge. Until then, we at HedgeTrade continue to work on our own decentralized application using the HEDG token. Join us to hear all the latest news and updates.