Tokenized Securities.pdf

Tokenized securities

The purpose of this Ebook is to guide issuers through the main steps involved in the process of launching a Security Token Offering (STO). Before we get into the operational process, it would be useful to introduce the topic area and define tokenization.

2017 saw a huge rise in Initial Coin Offerings (ICOs). This has, in turn, created a new asset class that has challenged the traditional makeup of financial markets. ICOs presented an important innovation, providing new pathways and more efficient flows for capital from a significantly wider group of investors.1 However, as the technology of blockchain developed rapidly, the regulatory framework has not been able to keep pace. We have seen plenty of ICOs associated with scandal and fraud, which has naturally caused uncertainty from issuers and shareholders.

With ICOs in decline, 2018 has been called by many as the year of the shift to STOs. Security tokens are regulated and in most cases backed by underlying assets. They can produce a regular yield for their holders, while providing more stability and guarantees for the investors.

2019 will be a structuring year for the industry. Efficient technologies will be released, traditional security service providers will enter in the market, investors will onboard, licensed exchanges will open and regulators will move forward. The first complete use cases will start delivering value to their investors and step-by-step, tokenized assets will become more attractive than others.