An early refrain from crypto commentators is that 2019 is 'The Year of the Security Token' (http://www.chepicap.com/en/news/6293/is-2019-the-year-of-the-security-token-.html), and accordingly, a number of security tokens have launched, all looking to capture investor optimism about the possibilities of STO's
One of the first notable pieces of news in that direction was the recent launch of the SEFToken, a 'covered warrant' security token. The covered warrant is a new type of security instrument powered by blockchain- as SEFToken's website states, the tokens grant 'the right (but not the obligation) to convert the SEFtoken into shares of the underlying asset,' which in this case is a portion of the Australia-based exchange and equity platform. The company claims that it is breaking ground, and numerous others will follow suite in issuing SEC-friendly digital assets. This is one of the main reasons that security tokens have become such a hot commodity- as the SEC cracks down on cryptocurrency, security tokens look a lot more attractive for their tolerance by regulators.
Read more: Will 2019 be the Comeback Year for Ethereum?
By backing up the digital tokens in an actual company, security tokens are a lot more favorable to the SEC and the CFTC, and in fact might give investors a little more confidence that significant collateral is on the line. What actually backs up the token is not necessarily factored into investor's decisions, though undoubtedly STO's will be evaluated based on what exactly is being tokenized. This is one of the big appeals of security tokens for investors and financial insiders. By digitizing various pieces of equity, or just generally anything of value, traders can utilize the same techniques for profitting and trading irrespective of the actual particularities of the underlying asset. It not only could radically expand what is able to be bought and sold, but it also means that traders can buy and sell much more rapidly, efficiently, and with a greater ease than ever before.
A press release from edeXa today announced a security token which stresses the 'security' part- launching a sale on their tokenized network of invoice and supply chain management with a special emphasis on the security afforded by blockchain. Still, the press release does not dwell on the network eedeXa is building, focusing instead on the novelty and potential profits for traders of the 'innovative' method of tokenization, which can ease investment and add signficant liquidity.
The tokenization of everything is likely going to move forward with head spinning speed in 2019. In April, Goren Holm Group, who put on the huge Crypto Invest Summit, are planning to host the 'Security Token & Digital Securities' summit as well as an advisory board called, appropriately Security Tokens LLC, announced yesterday. Clearly, the industry is taking 'The Year of The Security Token' seriously.
In 2019 we will likely see anything and everything 'tokenized.' Cadence recently announced the launch of a security token based on debt- CEO Nelson Chu giving the euphemistic pronouncement, 'structuring private, bespoke debt opportunities supported by diverse cash flows from alternative assets.' As security tokens expand the forms of equity that they are tokenizing, the assets which are digitized will be limited only to the imaginations of those who are motivated to digitize and profit off of 2019's rush to create new security tokens.
Read more: The legal implications of security tokens, broken down