According to the South China Morning Post mentioned in the mainland China, the potential market for securities-based tokens in asset-based securities is as much as US$ 24 trillion !
In 2017 , with the development of Yitaifang , the ICO ‘s first- investment tokens also took a bull market in the first half of the year. Unfortunately, the good times did not last long. In the second half of the year, the ICO ‘s first-generation tokens were negatively expanded. The collapse of the confidence market has led to the overall ICOmarket still in a bear market, and the anticipation of raising the relevant fraud concerns will be strict.
According to the Fabric Ventures token report , up to 58% of ICO ‘s first-investment token cases in 2018 failed to raise enough funds, resulting in a large number of investors exiting or divesting funds in the fundraising project.
Although the ICO first raised type tokens died down, but also for the STO bring the dawn of securities type tokens, according to the US NADAQ estimated STO Securities type tokens will be 2019 years to become the market mainstream.
The certificate type token is simply like the current financial instrument. It can share the profit, pay the dividend or interest to the investor, and the amount of the money will change according to the different nature of the subject. The subject matter itself can be the stock certificate, the bond. , real estate or art collections.
In essence, compared to functional token differences, products or services that are not simply used to purchase other cryptocurrency issuers.
The issue of token-type tokens and other financial assets has been significantly improved. The potential securities-type tokens are vast, and the market for financial assets is converted into tokens. The business opportunity is to see 24 trillion US dollars!
The origin of the certificate-type token depends on the current attitude of the competent authority and the regulatory framework, and the current regulatory direction in most countries is not clear.
In the United States, ICO first raised type tokens by the US Securities and Exchange Commission SEC regarded as regulatory gray area, and on many occasions that ICO first raised the token type as ” securities ” .
Interestingly, STO certificate-type tokens provide a system architecture that is more in line with current regulatory guidelines, such as KYC customer review and AML anti-money laundering requirements and other compliance assessment criteria, which can effectively make smart through STO securities. The contract is more transparent.
Although the current regulatory environment is still unclear, the initial early direction has slowly emerged.
Like the country of Malta, it has become a safe haven for blockchain training because of its friendly and relatively clear digital asset management practices. The basis for the establishment of the preliminary block structure of the three blockchains, digital currency and decentralized books was adopted by the Maltese Congress in July this year.
In Asia, Singapore and Taiwan, it has already shown that it is expected to become an incubator for digital asset regulations. The Hong Kong Securities and Futures Bureau has identified a balanced symbiosis model with relevant players on digital assets.
The most significant change in Hong Kong is that the platform operators of the current blockchain, such as exchanges, can apply to enter the Hong Kong Securities and Futures Commission sandbox, such as the issuance of securities-type tokens, and are expected to obtain relevant licenses. This move proves Hong Kong ‘s determination and ambition to develop STO securities.
The STO certificate type token is a more flexible mode of use of the current certificate. The blockchain technology itself provides more flexible and efficient ownership management and transaction medium for digital tokens, which is essentially like a certificate.
For example, Ethereum is a decentralized distributed computing platform that provides P2P digital asset transactions. Transaction clearing speeds are faster than traditional systems, and transaction costs are reduced.
STO certificate-type tokens are a big plus for publishers and investors because the automated execution mechanism of smart contracts can effectively remove unnecessary middlemen and significantly reduce operating costs, such as traditional audit procedures such as lawyers or accountant visas.
By creating STO-certificate tokens, it will significantly increase liquidity, make transactions faster, and effectively trade in global capital markets through 24 hours a day, with potential options for listing in the secondary market.
As far as investment is concerned, it will be more effective in creating trading channels for assets with higher traditional trading difficulties, such as real estate, weight stocks or artworks, which will attract new funds.
The structure of the STO certificate type-token itself is very flexible and can be packaged for special execution rights, such as dividends, voting rights and interest, to provide more yuan solutions in operation.
At the same time, assets are traded through free and open markets, and the price can accurately correct the reasonable value, making the transaction process more transparent, making it difficult for large organizations to manipulate.
The compliance costs of financial regulations are very impressive, and it is not a minority to reach more than one million yuan. The blockchain can be provided through an efficient mechanism: ownership, compliance, and a viable alternative to the state of the token network.
It is very difficult to estimate the current market value of STO certificate tokens. For example, the concept and technology itself are still in the grassroots stage.
Institutional investors are more conservative about trying to encrypt currencies and should hold similar attitudes to STO securities. Although the current STO certificate type-token currency is still insufficient, although real estate developers, art collectors, etc. find out the feasible application of STO certificate type tokens, it will help to improve market liquidity.
JP Morgan JP Morgan’s Quorum is based on the B-side Ethereum. Quorum wants to tokenize assets through regional blockchain technology and effectively store them in decentralized books.
The venture capital fund SPiCE successfully raised funds through STO securities, and the token is now available for trading in the secondary market.
The short-term main benefits of STO securities-type tokens are generally divided into lowering the cost of communication, smooth distribution channels, and the high elasticity of securities. In the future, when the advantages of STO certificate-type tokens are fully applied to the market, it will completely replace the current ICOfirst-generation tokens and their related applications.
Although the development of STO certificate-type tokens at this stage is mostly for technical applications, recent actions of national regulatory authorities have shown that STO-certified token-related issues tend to be serious.
The current institutional investors’ attitude towards the STO certificate-type tokens is slightly affected by the relevant laws, and once the technical structure of asset-tokens is clear, the wave of digital assets built on the blockchain will follow. Sincerely, stay tuned!