Cosimo Ventures Fund: Markets May Expect “Security Token Tsunami”
Security tokens, though still not materializing on the crypto markets, are seen as the answer to value creation after the protracted bear market.
Security tokens see more mentions each day, with the infrastructure preparing to meet the demand, from building platforms to making fully legalized exchanges compatible with security tokens. Connor Cantwell of Cosimo Ventures, a VC fund, believes the markets may expect “a security token tsunami” that will entice investors with a new selection of tokenized assets.
Cantwell believes startups may be ready for the new wave of Security Token Offerings, or STO despite being unprepared even a year ago. Due to closer governmental scrutiny and clearer regulations, regular STOs may become the norm in the crypto space.
Cosimo Ventures has invested in numerous cryptocurrency startups, and now offers its own security tokens to investors who want exposure to the fund’s portfolio of investments.
The expectations of security token issues come at a time when the ICO model is no longer viable. In October, only about $39 million was raised across the globe in token sales, and projects keep delaying their campaigns. Additionally, regulators are starting wider investigations into crypto assets in search of offerings that might fit the definition for unregistered securities.
On the other hand, tokenizing real-world assets relies on well-established regulations of ownership and value. Some early forms of security tokens are already available, and are mostly backed by cash and metals. There are still only rudimentary examples of tokens that behave as company stock, or represent company stock.
David Prais, formerly connected to the Cofound.It fundraising platform, believes security tokens will not repeat the hype of the crowdsale. In some cases, token issuers may turn to institutional investors. The crowdsale, with thousands of backers enticed to send in Bitcoin or Ethereum, has lost its appeal after a number of projects were either discovered to be outright scams, or did not manage to produce a viable product.
At the same time, private token placements have managed to save fundraising for some projects, and the same model may work for STOs.