Why security token offerings are replacing initial coin offerings via @bizjournals

As reported by Business Journals, “Unlike Bitcoin and other cryptocurrencies, initial coin offerings had a pretty good year in 2018. CoinTelegraph, a blockchain news and analysis outlet, reports that ICOs raised a combined $11.7 billion last year, which is 13 percent more than they did in 2017. But just as the cryptocurrency market very rapidly collapsed in early 2018, ICOs appear to be quickly losing their momentum, with November 2018 seeing the lowest ICO investment since May 2017.  

“One reason ICOs may be attracting less investment is the rise of the security token offering. Unlike ICOs, STOs give investors ownership over a real asset, such as a percentage of a company’s equity or real estate asset. Since the ownership of a security token has intrinsic value, investors can be relatively certain that the coin won’t become worthless overnight.

“Effectively, an STO gives investors access to a share of the company, a monthly dividend or a voice in the business decision-making process. Additionally, STOs, like traditional securities, must be registered with the U.S. Securities and Exchange Commission or other respective regulators, which is an attractive feature to investors burned in one of the 80 percent of 2017 ICOs that were probably scams.

“With all that going for them, it’s easy to see why there’s so much excitement surrounding STOs. But what does the ascent of the STO mean for businesses looking to raise capital through nontraditional means?

“One of the reasons that ICOs were so popular in the first place was precisely because entrepreneurs without any tangible product could raise the money they needed to build their business without going to the bank for a loan and without diluting their control over the company. From that perspective, isn’t the decline of the ICO an unwelcome return to a less democratic system of fundraising for early-stage startups?”

Continue to read the full story on bizjournals.com.