Bad ICO Publicity Paves Way For STO Growth

Nov 27, 2018 at 23:52

The continuing bad publicity towards initial coin offerings (ICOs) paving the way for the eventual rise of security token offerings (STOs), a report claims.

In a report by South China Morning Post, the phenomenon was partly caused by Fabric Ventures’ study which found that 58 percent of all ICOs conducted this year either failed to raise capital, disappeared or refunded participants.

Compared to ICOs, STOs involve security tokens that shares profits, pays dividends and even pays interest to the token holder as it is based on an underlying asset such as shares, bonds, real estate and even art collections.

The report cited Polymath chief executive officer Trevor Koverko’s statement that STOs will be the “next mega trend in crypto” as it easily has a potential market of more than $24 trillion.

“We’re not talking about the billions of dollars, we’re talking about the trillions,” he expressed.

The official also highlighted STOs’ inherent ability to provide a much more practical concept for regulators to approach since its know your client features and anti-money-laundering requirements can be easily made transparent within security token contracts.

Koverko added that the primary benefits of security tokens in the short-term will be reduced transaction costs, smoother issuance aside from greater flexibility of securities.

Earlier this month, DisruptBlock reported that funds generated in ICOs in the third quarter slumped from the previous three-month period as it only hit more than $1.8 billion compared to the previous $8.3 billion.