Security Token Market Could Expand Tenfold in 2019, Says Securitize CEO
After their tentative steps in 2018, security tokens may find a wider platform in the new year.
The security token market will continue to expand in 2019, possibly growing 10 times, according to Securitize CEO Carlos Domingo. In an interview for the 51percent Crypto Research Podcast, Domingo said he expected 2019 to be pivotal for the growth of the security token market.
Securitize is one of the companies aiming to create an ecosystem of security tokens, including transparent issuance and trading. It has attracted investments from Coinbase and Ripple and has already achieved the transfer of fully compliant security tokens.
The company focuses on the US market, while other security token ventures scout for opportunities in Europe and Asia. In the US, the Securities and Exchange Commission suddenly stepped up its scrutiny on tokens sold at initial coin offerings (ICOs), suggesting some of them may have been unregistered securities.
“Financial markets are beginning to view security tokens as crowdfunding on steroids… on a global basis, investors can come from 40 to 50 jurisdictions and that’s something that traditional technology will find much more challenging,” Domingo said.
The ICO model proved incredibly efficient before skepticism and falling market prices led to a freeze in funding. But with a fully legalized ecosystem and a new type of exchange and transfer mechanism, token sales may continue to attract some forms of investment.
Tokenized securities, which allow for better automation, transfers and control, will appeal to the traditional financial ecosystem and will see growth in the new year, according to Domingo. Until recently, tokens were believed to be immutable and highly secure, but it turned out that hacks and other problems are possible because of faulty smart contracts or tampering.
Security tokens have a more centralized form of control and potentially better cyber security. They also boast the advantage of trading and being sold for fiat, which may lead to a more predictable price. Security tokens could prove a better fit with the traditional financial system as they would not be dependent on Bitcoin (BTC) price fluctuations.