Are Security Token Offerings (STO) able to save the tarnished image of ICOs? In a regulated environment, “ICO 2.0” could bring about a revival of token sales, argues Sven Wagenknecht in a commentary on October 19. It’s time to take a closer look at a few of the projects.
The burst ICO hype of 2017 is still making waves. As was recently announced, the US Securities and Exchange Commission (SEC) formally summoned a large number of ICOs this year alone. Investigations are underway against the companies for violations of the Stock Exchange Act.
Time for an overview
STOs are a young phenomenon. Start-ups that make use of this funding are correspondingly rare. Using selected examples, we would like to draw attention to existing projects.
This raises the question of the future of the sale of tokens as a form of capital procurement for start-ups. As Sven Wagenknecht argued last Friday, 19 October, the ICO chapter is far from over even after the bubble bursts. In the form of regulated financial products, token sales could still be a viable way of raising capital. In a legally secure environment, STOs could finally bring institutional investors on board. This would be a milestone for the establishment of this form of corporate financing.
First a company from Germany. Brille24 is one of the leading online opticians in Europe. The company advertises with modern AI applications, which are intended to handle the purchase of glasses entirely online. This includes a virtual fitting and an online examination of the eyes.
Token Sales not yet at the end
To further finance research and development, the company is planning an STO via Neufund. Each token is secured 1:1 by company shares. Since these are de facto securities, investors are entitled to dividends.
In the growth ranking 2017/18 of the online platform Gründerszene, mySWOOOP ranked 25th among the fastest growing tech companies in Germany. The re-commerce company specializes in the price-optimized purchase and sale of a large number of used goods. With specially developed software mySWOOOP guarantees the purchase and sale at best prices.
mySWOOOP also plans to issue company shares on security tokens via Neufund in order to enable investors to participate in the profits.
The Swiss company BlockState is dedicated to the digitization of financial products. Smart Contracts are used for the management of token-based assets. BlockState focuses on a “more integrative financial market”, as Michael Weber, founder of BlockState, puts it.
BlockState also uses the CTF15 to manage a kind of crypto ETF that investors can use to cover the 15 largest crypto assets, according to the company.
BlockState is also one of the first companies to launch its STO via Neufund. The tokens are intended to grant investors the usual shareholder rights here as well. We already reported on the BlockState STO in June.
In contrast to the STOs presented so far, BlockEstate does not enter into a partnership with Neufund, but with the STO intermediary Polymath. BlockState is a financial company focusing on the US real estate market. Accordingly, BlockEstate would like to use the hardcap of 50 million US dollars to invest in a broad real estate portfolio. The security tokens also represent company shares here, so they should be regarded as securities. The distribution from the profits should take place quarterly.
The token sale as a means of corporate financing is obviously not yet obsolete. On the contrary, if the regulatory authorities, above all the SEC, learn the right lessons from last year’s ICO bubble, token sales could experience a real revival in the form of STOs. After all, reasonably regulated security tokens should finally also attract institutional investors.