2019 – The Year of Security Token Offerings?


“The Initial Coin Offerings (ICOs) are dead. Security Token Offerings (STOs) are the future”,

said Stefano Virgilli, the CEO of VOX, during his appearance at the NewConference.

As the ICO market started to slowly underperform in 2018, the crypto community started to look for alternatives. The second part of the year has been marked with a rapid decline in total funding for projects, as the number of successfully completed projects hit the annual lows.

Recently, Newconomy published a trend analysis of the ICO market.

For instance, the second part of the year has recorded the highest number of projects that collected less than $100,000, and the lowest percentage of the startups that were ultimately listed on the exchange, since the ICO’s boom started in mid-2017.

Thus, many analysts and advisors have called for an end of traditional ICOs as they predict a shift towards the STOs in 2019.

Why STOs? Their setup is much more suited to adhere to a set of respective rules and regulations of the financial authorities. In essence, STOs are built to decrease regulatory uncertainty that surrounds the ICOs.

In simple terms, investors want to own a real-world asset in exchange for their investment, which is not the case with the ICOs. The projects that complete STO and comply with regulations of the regulatory authority, for instance, the U.S. Securities and Exchange Commission (SEC), are much more likely to attract serious interest from investors as they are backed by the real-world assets and legally binding contracts, which are approved by the regulatory authority.

In short, the uncertainty that surrounds the setup of ICO will be replaced with the clarity of the STOs.

As a result, investors would purchase securities that are legally compliant and easily tradeable. Thus, by increasing the trustworthiness of the entire market, the door would be open for the entry of the biggest financial players in the game.

By replacing ICOs with the STOs, the market will spit out the scam in the context of fraudulent and ill-equipped ICOs. Whilst the core product remains the same, more legal rights are given to investors, thus increasing interest and confidence of potential investors.