Security Tokens Facilitate Improved Norms and StandardsOctober 29, 2018
Security tokens are here to save the cryptocurrency from the bear market. They are set to be the future of the tokenized assets.
Several startups are launching security tokens via the blockchain marketplace. Tokenized dividends are already a widespread topic among investors.
Canadian regulators are permitting regulated startups to sell tokenized securities to retail and institutional investors. All that the regulators insist is for the token issuer to conduct know your customer check. The issuers were also required to disclose the numerous risks in the investment to their customers.
The earnings made from these investments will be distributed to the clients via smart contracts. While ICOs are risky transactional assets that have a speculative value and nothing real, regulators will not be able to measure their returns. Security tokens are real assets and issuers given an optimistic tone to these tokens.
Security tokens technically decouple themselves from “risky” transactional assets. The idea of cryptocurrency is about improving self-sovereignty; however, security token projects are about tokenizing equity with real estate assets or other physical goods.
Security tokens are meant to be compliant, and lawmakers are reviewing the regulatory standards concerning anti-money laundering checks to ensure that what happened with cryptocurrency does not happen with security tokens. KYC requirements are in the pipeline for Canadian Bitcoin projects.
It is not easy for companies to take the scanned driver’s license copies and photographs of clients to state that they know them. In order to facilitate improved norms and standards, it is important for companies to facilitate improved choice in the market.
While many are of the opinion that overzealous regulation will “kill the whole ecosystem.” The reality is that security tokens are here to stay as regulation is only making them more reliable among investors.
It is also seen that companies are trying to move on to jurisdictions that have more lenient tax and regulatory obligations. A lot of things happen with the current regulatory craze.
So, those who think that the regulatory system in their country is not facilitating their growth, they are going to jurisdictions that will help fuel their growth.
Lawmakers are critical about the situation, and they keep asking if there is some benefit to the public from these policies. Many platforms are wishing for a minimal regulation; however, regulatory bodies are looking to make it exhaustive and clear to ensure overall public protection. They did not want to screw things up royally, and they want to keep away from insanity in order to ensure safety in using the security tokens by their respective public.
Stricter standards from the regulators will want crypto startups to disclose indiscriminate data of their investors when their transactions cross a set limit.
Despite all, the prospects for real estate tokens are bright. Leaseum Partners, for instance, are offering real estate backed tokens for New York properties.