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Are Security Tokens Killing ICOs? 

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Are security tokens killing ICOs

As the cryptomarket continues to evolve, the emergence of new trends and technology reshapes the playing field. Security tokens give companies the ability to utilize blockchain technology while remaining compliant to today’s financial standards. As the security token market expands, the ICO market appears to suffer. This has led many to the question – are security tokens killing ICOs?

There is no doubt that the ICO market shrunk considerably ever since the introduction of security tokens – but are two correlated. A recent study conducted by ICORating shows that while security token adoption is on the rise, it is still utility tokens which are the most successful in the market.

Market Shuffle

According to the same report, utility token offerings decreased by 10.07% in Q2 2018. This decrease reshuffled the market. Today, 49.05% of all token launches are service tokens. Service tokens are used to pay for services within a platform. These tokens grant users access to a particular platform or service provided.

ICO Data via ICORating

ICO Data via ICORating

Utility Tokens

Utility tokens make up 25.3% of the total tokens issued this year. A token is a Utility token when it represents a certain protocol. Examples of this type of token are Ethereum, NEO, Stellar, and Cardona. These platforms can issue new tokens on their infrastructure.

Hybrid Tokens

Hybrid tokens make up 12.47% of the tokens issued in 2018. These tokens provide users with some form of payment for their participation or work performed. These tokens can provide payment for services as well. Hybrid tokens continue to increase in popularity as security token usage expands.

In most instances, a token will start off as a security token during the ICO process and then convert to a utility token upon the completion of the crowdsale. The SEC determined Ethereum followed this timeline. Today, tokens can offer equity and access to utilities, services, and platforms.

Security Tokens

Security tokens account for 6.54% of the token issuance market. These tokens follow strict securities guidelines. These regulations require that both companies and investors reveal their identity and financial information. While security tokens are one of the fastest growing areas in the market, it is interesting to mention they are not yet as effective at raising capital when compared to utility, or hybrid tokens.

There is a growing number of crypto analysts pointing towards security tokens as the future of the cryptomarket. These tokens provide a gateway for traditional investment firms to enter the crypto market. For this reason, analysts predict security tokens will dominate the market in the coming months.

The remaining categories include payment cryptos (6.54%), reward tokens (1.55%), and vote tokens (0.52%) respectively. Of the token categories, hybrid, reward, and utility tokens raised the most capital this year. Security and service tokens raised the least. In total, STOs averaged around $250,000 in funds raised per event.

Market Overview

2018 ICO Statistics via ICOdata

2018 ICO Statistics via ICOdata

According to ICOdata, there were 1181 ICOs with total capital raised at $7,320,445,133. The ICO market took a hard downturn in July when it dropped from $800,000,000 to $400,000,000. The market continued to shrink since then. Last month was the slowest ICO month to date with around $150,000,000 raised.

The Results are Inconclusive

While the increase in security token adoption seems to be cutting into the ICO market it isn’t the main issue causing the market to falter. The SEC continues to crackdown on ICOs with charges filed against multiple ICOs this year. Ultimately, this pressure fueled the troubles experienced in the ICO sector.

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David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including bitcoinlightning.com

Security Token News

Vtoken Exchange Celebrates SEC Filing in Time Square

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Vtoken Exchange Celebrates SEC Filing in Time Square

The largest decentralized exchange in the world, Vtoken, obtained its SEC filing from the United States Treasury Department this week. The firm took to the world-famous NASDAQ billboard in Time Square to celebrate the move. This is the second time the company graced this iconic attraction seen by millions. Also, the move symbolizes further blockchain integration into traditional securities markets.

Speaking on these developments, Vtoken’s Chief Advisor to the Asia Pacific Region explained how his firm plans to cultivate a robust blockchain ecosystem. He took moment to discuss recent global developments in the security token space. Specifically, he touched on how both Chinese and American markets experienced a huge surge in blockchain-based firms.

Vtoken Platform

The Vtoken combines the regulatory protections found in the traditional securities markets with the efficiency of a blockchain -based system. The company offers transfer agents flexible solutions to many of the current issues plaguing the securities markets.

For example, traditional securities can take three days for trades to complete. This delay leaves investors in a less than optimal position. In contrast, Vtoken’s blockchain-based system can complete trades in a matter of hours. Consequently, the platform enables a more nimble trading experience.

Vtoken via Homepage

Vtoken via Homepage

Real World Experience

Vtoken is a unique hybrid of technology, compliance, experience, and professional customer service. The firm handles a wide range of clients but specializes in Regulation A transactions. To date, Vtoken’s clients include NASDAQ, NYSE, OTC-listed firms, IPO-issuers, and private investors.

Vtoken’s strategy is unique in that the firm created a complete blockchain ecosystem. Here, investors can get all the information they need to host a compliant STO.  The company offers a full range of solutions for both enterprise and private investors.  These services include pre and post token issuance and management, smart contract programming, and ownership protection.

The latter feature is unique to V-token. This functionality allows investors to restore lost or stolen tokens, an option not usually available in the blockchain space.  More importantly, Vtoken is now in a very exclusive class of decentralized exchanges registered with the SEC.

Vtoken

Vtoken shares many of its core developers with Ripple. Additionally, Vtoken utilizes graphene underlying technology. The token has a trading gateway that is similar to Stellar Lumens. This enables the platform to maintain optimal transaction speeds. Currently, Vtoken can process transactions faster than the third-generation crypto EOS.

Partnerships

Last month, Vtoken made headlines after forming a strategic partnership with blockchain payment platform PayDex. The PayDex platform functions on Vtoken’s public blockchain. The system provides global crypto settlement with support for BTC, ETH, VToken, USDT, VRT, YEC, EOS, LTC, and VUST. PayDex seeks to bring crypto payments to the masses through a simplistic mobile interface.

Vtoken Ecosystem

Vtoken’s all-inclusive approach to the market is crucial to its overall strategy. V-Token provides users with everything they need to become a player in the security token market. You can expect to see this firm continue to make headlines s the platform expands in the coming months.

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AlphaPoint and Elevated Returns to Develop Secondary Market

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AlphaPoint and Elevated Returns to Develop Secondary Market

Secondary Markets

‘Making Illiquid Assets Liquid’ – That is the guiding sentiment behind AlphaPoint, a young company which utilizes blockchain to facilitate tokenization.

This idea is one step closer to becoming a reality, as AlphaPoint has just announced a partnership with Elevated Returns – A forward thinking company which specializes in real-estate.

In this announcement, the pair has indicated that they will be developing a secondary market for trading digital securities backed by real-estate. It is through secondary markets that traditionally illiquid assets, such as real-estate, will become easily tradable – all the while opening up fractionalized ownership, and opportunity for exposure to retail investors.

Elevated Returns will focus these efforts on Asian markets, following their expansion into the region roughly one month ago. At the time, the company acquired a large share in a Thai broker-dealer – a move allowing for them to commence operations through previously attained licensure.

Commentary

In their press release, Stephane De Baets, President of Elevated Returns, commented on this development. The following is what he had to say on the matter.

“Elevated Returns prides itself on our reputation as a pioneer in the digital securities space. To that effect, we have a policy to partner with the best in class companies across industry verticals; AlphaPoint’s technology solutions for unlocking digital asset liquidity are unparalleled. Having already demonstrated the capability to integrate with the token standard that we are developing on the Tezos blockchain, AlphaPoint was the clear choice to facilitate the adoption of our tokenized real estate initiatives.”

AlphaPoint

AlphaPoint is a United States based company that was founded in 2013. With their sights set on ‘making illiquid assets liquid’, AlphaPoint has successfully serviced global customer through their various service offerings.

Since opening their doors, AlphaPoint has seen their diligent work towards growth land them customers in 5 continents, to date.

Company operations are overseen by CEO, Salil Donde.

Elevated Returns

Elevated Returns is a United States based company, which specializes in investments surrounding real-estate. Recognizing the potential of digital securities, Elevated Returns operates with a goal of acquiring assets viable for tokenization.

One such example was the noteworthy tokenization of the St. Regis Resort; A high-end ski resort that successfully sold digital securities representing ownership within the resort, becoming one of the first to do so.

Company operations are overseen by President, Stephane De Baets.

In Other News

We have detailed developments pertaining to both AlphaPoint and Elevated Returns in the past few months. Check out the following articles to learn a bit more about what each of these companies has been up to in this time.

Laureate Digital Partners with AlphaPoint on New Security Token Exchange

Elevated Returns and Securitize to Utilize Tezos for Digital Securities

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Due Diligence Process Delays tZERO Investment

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Due Diligence Process Delays tZERO Investment

Deadline Missed

Today, tZERO issued a statement to their shareholders, commenting on their ongoing investment by Makara Capital, which we previously detailed.

In this statement, they indicate that while this investment is on-going, further delay is unavoidable. After initially setting a mid-April deadline, the due diligence process is simply more time consuming than initially thought.

Commentary

In the update, distributed to its shareholders, Patrick Byrne expressed praise for Makara, while commenting on the tenuous nature of the deal and reassuring readers at the same time. The following are a few excerpts from this statement, highlighting these sentiments.

‘Makara’s due diligence has progressed, and in the course of its due diligence Makara has proven to be a professional and serious fund. Still, the parties will not have a definitive deal in place by the mid-April target.’

‘tZERO plans to continue facilitating Makara’s diligence, but is not under any exclusivity with Makara or GSR and has retained advisors to pursue parallel alternatives. We will update shareholders after tZERO signs definitive documents.’

‘Our retail firm is recovering more dramatically than I anticipated and discussed during our Q4 2018 earnings call. In addition, tZERO is on track to introduce the products described in that phone call. Our intense focus on execution is paying off.’

Many Pots

This news may be slightly disheartening, as it represents, not the first, but second hiccup in the investment process. Despite this setback, tZERO has been on a tear over the last year. They are not being held back by this process.

tZERO has their hands in many pots, with endeavours resulting in the launch of a trailblazing secondary market for digital securities. Beyond this, tZERO has seen progress through adoption, and the awarding of patents.

tZERO

tZERO is a United States based company that was founded by Patrick Byrne. A subsidiary of Overstock, tZERO functions as a platform catering towards the digital securities sector.

Founder, Patrick Byrne, has reiterated his strong belief in digital securities multiple times over the past year. He has gone so far as to shift his entire focus from Overstock to tZERO and its ongoing development. Unmoved by ‘crypto winter’, Patrick Byrne has, in the past, commented to The Wall Street Journal, on the potential of tZERO. He stated, “I don’t care whether tZERO is losing $2 million a month…We think we’ve got cold fusion on the blockchain side.”

In Other News

tZERO is a regular in our news feed, as they have been pivotal in establishing the digital securities sector in its infancy. Below are a few articles detailing past developments pertaining to this impressive and important company.

GSR Capital turns to tZERO for the Tokenization of Cobalt

tZERO Completes Distribution of Security Token

Overstock Repositions Blockchain Executives as tZERO Launches

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