Is STO replacing ICO as the ‘new sexy’ in the cryptocurrency community? via @SCMPNews

As reported by the South China Morning Post, “The 2017 boom in cryptocurrency initial coin offerings (ICOs) due to the success of Ethereum was followed by a sharp decline and extended bear market in 2018, amid increasing regulatory concern over fraudulent incidents.

“According to a comprehensive token report by Fabric Ventures, 58 per cent of all ICOs in 2018 failed to raise capital, disappeared, or refunded participants.

“However, the decline of ICOs has opened the door to a new type of token offering, the Security Token Offering (STO), which according to Nasdaq, is ‘set to take centre stage in 2019’.

“A Security Token is a cryptographic token that shares the profits, pays dividends or pays interest to the token holder based on an underlying asset, such as shares, bonds, real estate, or art collections.

“This is different to a Utility Token, which is used to purchase a good or service offered by the issuer of a particular cryptocurrency.

“The notion of security tokens and other tokenised financial assets has gathered significant interest over the course of the last year. The potential market for security tokens is enormous, with estimates for the broader transition of conventional financial assets to the blockchain valued at as much as US$24 trillion.

“The future landscape for security tokens will depend heavily on the structure of the regulatory environment, which at this point is unclear in many jurisdictions.

“In the US, ICOs are viewed as a regulatory grey area, with the Securities and Exchange Commission (SEC) commenting several times that most are indicative of security offerings.

“However, STOs provide a much more practical concept for regulators to approach, as know your client (KYC) and anti-money-laundering (AML) requirements and other compliance measures can be made transparent within security token contracts.”

Continue to see the full story at the South China Morning Post.