Security Tokens End 2018 on a High Note

2018 has been a wild ride for the world of blockchain. The industry began the year at the peak of an unsustainable bubble.  As a result, it is now finishing the same year at what many believe to be the bottom of the market – Meaning 2019 has tremendous upside.

Potential growth in the digital securities sector is a major part of that potential upside. 2018 saw a crack-down on ICOs and an amazing amount of fraudulent tokens. However, 2019 promises to deliver functional products that are regulated, liquid, and secure.

A Year in Transition

There was a clear transition away from ICOs throughout the year, despite a record amount of funding being brought in through them. However, it is important to remember that a select few ICOs raised a good chunk of the total money gathered.

This transition can primarily be attributed to the Securities and Exchange Commission. While warnings from the SEC began much earlier, it wasn’t until mid-2018 that they actually began to enforce regulations. For instance, it was here that eyes really began to shift towards security tokens.

Platform Development

There is a race to develop user friendly platforms, for both potential token issuers, and investors alike. While there are many promising platforms that have jumped into the fray, here is a look at the two leading the way – One in North America, the other in Europe.

Securitize (North America)

• This company immediately comes to mind. Led by CEO, Carlos Domingo, Securitize recently received over $12million in funding from industry stalwarts such as Coinbase.
• Services offered by Securitize have seen more adoption than most. Companies such as Spice VC, 22x Fund, Blockchain Capital, and Augmate, have all turned to Securitize in some capacity.

NeuFund (Europe)

• NeuFund is well poised to continue gaining traction, having just completed their own STO. Figures from their own token sale were double of those expected.
• This platform represents, perhaps, that with the most adoption in Europe. Neufund has at least 10 companies lined up to complete STOs.

One thing is certain – 2018 was a productive year for product development. With this out of the way, 2019 should see the adoption and usage of these services.

Token Protocols

An increased focus on security tokens has led to increased scrutiny on the viability of certain protocols to provide the needed security and efficiency. In other words, by recognizing that simple ERC-20 tokens would not work as securities, multiple companies decided throughout the year to develop their very own protocol, tailored specifically towards the digital securities sector. For example, here is a look at a couple of those standards:

Polymath

• Developed a variation of the ERC-20 token standard, known as ST-20. This standard has seen minor industry adoption, as it provides the necessary security and transparency features necessary in the digital securities sector.  As development continues, Polymath finds their protocols evolving with the advent of ERC-1400.

Harbor

• The Harbor platform has already gone live.  This means that token issuers are able to utilize the in-house standard known as ‘R-Tokens’. These regulated tokens represent Harbor’s bid to become the industry standard for protocol use.

Successful STOs

2018 was most definitely a year primarily noted for its development of industry infrastructure.  With this in mind, there were multiple instances where companies capitalized on this burgeoning sector. Here are a select few STOs that took place, and were successful in 2018:

St. Regis Aspen Resort

• Raised $18 million through the sale of digital securities representing equity in a luxury Ski-Resort

Science Blockchain

• Raised $12 million through the sale of digital securities representing shares within an incubator fund for start-ups working in blockchain

tZERO

• Raised $134 million through the sale of digital securities representing fractionalized ownership of tZERO. Above all, a company that specializes in integrating traditional finance and blockchain services.

2019 and Beyond

Overall, 2019 is shaping up to be promising for not only digital securities, but for the blockchain industry as a whole. Industry fundamentals have never been better.  In addition, infrastructure is rapidly being developed which will support the next boom.

Looking back, we have seen the launch of a variety of platforms, and multiple STOs successfully hosted on them.  In addition, we have seen the creation and adoption of various token standards. Furthermore, we have seen a steady increase in excitement towards this burgeoning sector.

Closing out 2018, here are a few words from Brian Armstrong. Speaking at TechCrunch 2018, he commented on the future of digital securities, stating, “It makes sense that any company out there who has a cap table… should have their own token. Every open source project, every charity, potentially every fund or these new types of decentralized organizations [and] apps, they’re all going to have their own tokens,”