Fintech Genome

Security tokens


#1

2018 brings an end to ICO and the introductions of SECURITY TOKENS

TAO ( Token Asset Offering )

The market can now clearly divide the two types of TOKENS

Utility Token
-this is great for companies who have already a points system or token built
-has a large user/community/users in their platform
-no secondary exchange for the token

Security Token
-for all companies globally
-you must use an exemption that is allowed in the country which you are selling your tokens


#2

Hi @oscar Yes, I think Legacy Finance has Equity + Debt. Blockchain Finance has Equity + Utility Token. The latter is as much about marketing as it is about capital raising and a well designed Utility Token has a big impact on Equity value.


#3

Hi @BernardLunn .

The market is adopting tokenization but one thing is very clear an utility token has no place within the securities regulations.

The first 2 waves of tokenization was all marketing, fraud and nothing to show. The next wave is much different.

2019 is the year of the Security Token Protocol that gets adopted by companies, investors …

Oscar


#4

I am going to take the opposite side of this argument. Too many people are promoting STO’s with absolutely no understanding of the hazards involved.

No company with under US$10 million in revenue/year has any business even considering launching as a regulated security. Having previously had a company destroyed by trading on the OTCBB, I have great experience in what happens to small cap companies that allow themselves to be traded on markets. If your token has any liquidity at all, sophisticated investors will find that they can make more money by killing your business quickly than the believers will have stomach for over the long term. You don’t need STOs for this. Just look at penny stocks. These are the kinds of psychopathic traders you are going to be exposed to, and they have absolutely no concern about you. To them, you and your company are just disposable resources.

Unless you have fantastic revenues to fend off an attack, you are going to be destroyed. It is one thing when this happens on a utility token, but when this happens on a security token which is tied to your company, you will quickly find the regulations disallow many options from escaping from this trap and your ability to raise money is severely compromised. You will be forced into toxic financing which results in a death spiral.

I find it inexcusable that many advisors with no experience in small cap securities are advising startups to do tradable securities via STOs. This is an absolutely horrible idea, and will definitely lead to advisors themselves needing to be regulated. The damage to the industry is going to be an order of magnitude worse than the relatively minor damage done from scams in utility ICOs

STO’s are not the answer. That light you think you see is actually a train coming at you.


#5

This is not an opposite view of an STO. This argument is basically saying NO MORE INNOVATION … wow.
if we went by this example:

No Twitter
No SalesForce
No LinkedIn
No Facebook
these are just a few when they raise capital had no revenues

STO are not the problem, its how they are been abused by the same people that depleted investors money with ICO

STO (currently done in Europe is going to be harmful to the market
STO ( currently done in ASIA are going to be extremely harmful

STO coming from USA, Canada, Australia, Singapore, UAE
are companies using current exemptions to raise capital and simply tokenizing their securities.

STO are the future


#6

I am with @oscar on this one. STO need transparent data, but given that the market will take care of it. There are bad entrepreneurs and bad investors in any marketplace, but also good ones. A shrinking equity base and a market duopoly (NYSE/NASDAQ) is not healthy.