We have built up extensive knowledge in blockchain over the past years and extensively engaged in the security token market since the beginning of 2018. In October 2018 we decided to create an STO working group with our existing and some new stakeholders from the ecosystem with the following goals on behalf of NEM Europe:
Gain a clear overview of the STO ecosystem and its stakeholders, regulations in the various (European) jurisdictions & the existing security token approaches
Connect (the existing knowledge from) different stakeholders in the STO market
Define technical requirements for issuing, holding and trading Security Tokens
Make substantial progress towards a native Security Token solution for NEM Blockchain
Key takeaways for the STO market
So, what is the current state in the securities token market and what are the next steps?
Further improvements in legislation are very actively being discussed in European parliaments.
In order to truly achieve a shared infrastructure within the industry, either an independent party must take the lead or another infrastructure project that various exchanges will utilize.
Security tokens are one specific use case of blockchain which is highly regulated. Therefore, all people participating in STOs have to comply with existing laws. The current maturity of blockchains and consequently inherent bugs, as well as regulator demands, will require rollbacks (“Snapshots of previous state and reissuance of tokens”). This is very much contradicting decentralized blockchain principles but needed for compliance reasons. The real power of holding custody of your own assets & a self-regulated token should be a long-term goal.
A nice visual overview of the STO market and offerings was recently also shared by Stocheck.com. While a lot can be improved in the future, the issuance of a security token is possible today and can be a good financing option for a (non-) blockchain company. Ultimately, platforms need user adoption and must collaborate towards a shared infrastructure.
More insights to blockchain, ICOs & STOs
In order to discuss Security Tokens, it is important to have a good understanding of financial markets, of Blockchain technology and of legislation in various markets. Since there are very few people that have in-depth knowledge in all these areas it is important to bring the different experts together and build up a shared understanding of the future market.
It is clearly no coincidence that the current leading securities infrastructure projects include professionals that have years of experience from top financial institutions, are consulted by top legal teams and have closely worked together with regulators for multiple months or even years.
We believe it is essential for companies, projects, ICO participants and STO investors to have a basic understanding of financing, (financial markets), blockchain, tokens, the ICO/STO process, good blockchain use cases and further concepts in order to understand the full potential we can unlock with blockchain. If this knowledge is not inhouse, it is important to connect with the right people & consultants that are able to guide you through this “jungle” on your path towards a successful project. Since we have a decent background in these fields & a large network of experts, we will start a series of in-depth articles including further deep dives into specific parts of the security token report, insights to blockchain, use cases & sources of funding. Sign up below to get the latest updates comfortably per mail once per month.
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