STOs and New Token Models Are Gaining Momentum in 2019

Dmitri Koteshov
Digital Content Manager
March 12, 2019

How would one describe the impressions of the previous year within the realms of cryptocurrency universe? Well, if an analogy is enough, I’ll go with this one: 2018 was a roller-coaster ride for the community. I mean, literally. In spring and early summer, things looked quite promising, but the sudden and growing decline of digital currencies’ value by the end of the year has resulted in the advent of the “crypto-winter” state.

In December 2018, the biggest name in the industry – Bitcoin – was down by nearly 75% in comparison from its peak results, and the whole token market couldn’t help but fall by 80% in terms of capitalization. According to a recent report from Reuters, an American multinational investment bank and financial services company JP Morgan believes that Bitcoin could still hang out somewhere around $2,400, but chances are it could fall below $1,260 due to the impact of the bear market.

But let’s look at this rather grim picture from an optimistic perspective. Brayton Williams, the co-founder of Boost VC, is sure that what the general public calls a “crypto-winter” is just a return to the status we could have witnessed if the Great Bitcoin Boom hadn’t taken place: “The investment money is returning back to the norm of difficult to obtain. I think the ‘winter’ is greatly exaggerated. We are just back to normal behaviors.”

So what’s the conclusion? Is the situation becoming worse and worse for the global crypto community? Not at all. In fact, it’s quite the opposite. Here are the numbers. The fourth ICO / STO report by PwC Strategy in co-authorship with Crypto Valley Association (CVA) claims that last year, 1.132 Initial Coin Offerings (ICO) and Security Token Offerings (STOs) were successfully completed, doubling the results of 2017 with 552 done deals respectively.

If you’re no stranger to the cryptocraze, I’m sure that you’re familiar with the term ICO taking into account all these scandals covered with enthusiasm by various media. What are STOs then? A Security Token Offering doesn’t drastically differ from ICOs. As the definition above says, an STO represents a sort of a more regulated form of ICO, and the corresponding tokens have different financial rights, dividends or shares among other things. Besides, STOs contain a number of features specific to ICOs – for instance, low entry barriers for investors and traditional Venture Capital / Private Equity fundraising attributes such as regulations based on local security laws.

The overall amount of funds raised within the course of STOs has reached almost $20bn. In other words, its results have tripled in comparison to 2017 with its grand total of $7bn. Yet, two unicorn ICOs – EOS ($4.1bn) and Telegram ($1.7bn) – contributed $5.8bn to the overall 2018 volume.

As of today, due to a large number of scams, the players on the market request new services and features such as:

  • a new level of protection;
  • flexible custody solutions;
  • market data services;
  • reliable rating services;

It’s worth noting that these increasing expectations are largely beneficial for the whole market. As the regulatory requirements of STOs have become stricter, the current infrastructure, like trade and custody, will evolve too. The most experienced stock exchanges and financial institutions have smelled this opportunity, so now they are expanding their services to support precisely the world of crypto.

As for the actual trends in the crypto domain, according to the report, the asset tokenization, or the conversion of real-life assets to the blockchain technology, may be regarded as the presiding trend this year.

At the moment, STOs are gaining popularity in the cryptocurrency industry. Let’s see if this time it’s going to change the world of fintech. I mean with all this critique… Just yesterday, Nouriel Roubini, an American economist and renowned anti-cryptocurrency ambassador, called it (yet again) a scam and declared that crypto “as a technology has no basis for success.

So haters gonna hate, or, as they say, only time will tell.  

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