There is no doubt that Security Token Offerings (STOs) and tokenized assets will drastically affect the financial industry. Tokenized assets can replace the regular process of an Initial Public Offering with a lightweight procedure that removes many intermediaries. At the same time, Venture Capitalists benefit from more liquid assets.
This post sums up the development of STOs in 2019 – with an outlook to 2020. For the full report, please click the link to immediately view it online.
2019 can be considered as the serious start of tokenized assets. Although the concept has been developed earlier, 2019 was the year in which STOs received the intention from the classical financial industry. There is no bank that did not have a look at STOs and tokenized assets yet. Big accounting firms and Consultancies are trying to encompass the technology. At the same time, Regulators are entering a worldwide race of who can provide the best environmet for companies to issue, safekeep and offer their assets within a specific jurisdiction.
The fragmented landscape of different jurisdictionns within Europe leads to the competition between countries. Liechtenstein, Luxembourg, Switzerland and Germany are tackling STOs with more and more resources. Several STOs received approvals to conduct their offering.
More than 30 STOs have been conducted within the United States, followed by Switzerland with less than half of that. The United Kingdom also counts several STOs, while other countries (especially from the European Union) conducted less than five STOs in 2019.
Most of the offerings were based on equity offerings. This proves that STOs are currently mainly used to raise funds for companies and startups. However, real estate offerings are significantly rising.
There are three different elements that will drive the most significant change for STOs in 2020:
- STOs will be a serious disruption of
the f inancial industry (e.g. IPOs) and
notariies as well of legal work.
- Standardization will evolve.
- Financial companies can change their
business model to a technology