Yesterday, it emerged that Bithumb, one of the largest crypto exchanges in South Korea had signed a deal with a U.S fintech company. The deal will supposedly see Bithumb open a security tokens exchange in the U.S. If this works out, and regulations become more favorable to crypto in the U.S, more exchanges focused on security tokens could emerge. Actually, they could become the norm, and companies would move to tokenize, in order to gain access to more liquidity.
In such a scenario, security token exchanges could get as big as the NYSE. This would open up the stellar network, and could see the value of stellar (XLM) rise significantly in the future. That’s because stellar is already leading the way in asset tokenization. A platform like Smartlands has already proven that there is a huge demand for stellar based asset tokens as per the number of companies that are tokenizing on it. Simply put, stellar does have a head start in asset tokenization, and it’s a good reason to be bullish on stellar (XLM). That’s because the appetite is there, and with the unreliability of ICOs as an investment, and as a way of raising capital, STOs could be the answer to financing.
Several factors support the possible rise of STOs in an explosion that could dwarf that of ICOs in 2017. The first one is security. Unlike ICOs, an STO offers investors an element of security in the sense that, they are sure that the business they are investing in exists, and there is a real underlying value to it. That’s unlike an ICO where investors basically throw money at an idea and hope that it works.
The valuations of ICOs are also quite arbitrary and pretty much determined by the token issuers. This element of security will drive up the levels of investment in STOs. Once regulators in the U.S approve security token exchanges like the one Bithumb is working on, there could lead to an STO craze in 2019 in beyond.
Secondly, STOs have a lower risk of getting in trouble with authorities than ICOs. That’s because STOs are more akin to IPOs. The model allows for compliance to existing securities laws. This makes them quite attractive to both retail and institutional investors. Once the concept of STOs gains a foothold in the markets, institutional money will FOMO into it too. That’s because they are assured that the security of their money is guaranteed, backed by government regulations. If institutional money FOMOs into STOs, this will definitely be the biggest phenomenon in crypto space, and could actually change the stock markets as we know them for good.
For stellar investors, this is a big deal. That’s because stellar (XLM) is the native currency of the stellar network. This means if there is an explosion in the demand in STOs, the demand for XLM will rise too. When you factor in the other use cases of the stellar network, it’s not hard to see why this crypto has a wonderful future ahead of it.