Security Tokens Will Shape the Future of Asset Management in Asia
South-East Asia has always been a strategic region for the crypto and blockchain industry. But the last year’s downfall of the Bitcoin and other top cryptocurrencies has dramatically affected the excitement of the crypto enthusiasts worldwide. Did this letdown extend to Asia, and is the region still valuable for those who switched from shaky ICOs to tokenization of securities?
We believe that not only is Asia still enthusiastic about crypto and blockchain, but also that Security Token Offerings will shape the future of the new era of capital management in the region.
In recent years we’ve observed a new cohort of Asian investors emerging. They are young and progressive, and they value the flexibility and liquidity in the process of investment management. They are open to investing in a wide range of blockchain- and crypto-related enterprises, just to experiment with new financial instruments.
Unlike European and North American investors, they are less suspicious and really enjoy the ride, even when losing some of their investments due to fraud or poor project management. Be it the nature of their approach to life in whole, or the average age (25 for Asian investors as opposed to 35–40 in other parts of the world), but all the turbulence that occurred within the industry in 2018 did not affect their readiness to deal with crypto-fueled fundraising.
Why Are Security Tokens so Appealing for Asian Investors
The majority of ICOs provided their contributors with utility tokens that turned out to be nothing but ‘candy wraps’ in case of any trouble with the project. Security Token Offerings, conversely, provide the token holders with something valuable and tradable, even outside of the project’s ecosystem. Security tokens can represent a wide range of assets, including a share in the company’s valuable property, tokenized equities, fractional ownership, debt tokens (which are basically loans with an interest rate), etc. Even in case of a bad scenario, the investors have an opportunity to redeem their contributions by selling the assets they’re holding.
Asian investors these days seek ways to diversify their crypto portfolio. The current exchange rates make in unprofitable to transfer a large amount of crypto into fiat money. This brings us back to security tokens. By purchasing them, an investor backs a portion of his crypto portfolio by the real world assets. He still has these assets in a digital form, but in case of any problems, he is protected by the applicable laws concerning the authorized trading of securities, in particularly the same way as with traditional equities, bonds, etc.
And the second point, purchasing security tokens is much easier than buying traditional assets since all the excess paperwork and intermediation is removed from the process. The investors can buy security tokens directly from the issuer — or on the security token exchanges. Some of the projects even choose to run Initial Exchange Offerings (IEO) — it allows them to enter the market faster and to shift the KYC (Know Your Client) and AML (Anti Money Laundering) procedures to the exchange’s facilities.
Given that, security tokens are seen by young Asian investors as a financial tool with improved liquidity and flexibility. They are tirelessly searching for new promising STOs with a proper licensing from the authorities regulating the trading of securities within their jurisdiction. That’s why we strongly advise the projects planning an STO to address the Asian market alongside the EU and US markets.
Every week we see more Security Token Offerings announced. Notably, the number of non-blockchain businesses who opt-in for STO is increasing. Be it independent musical promotor like StreetLife International,…
More and more companies are taking advantage of asset tokenization and raising funds through selling security tokens that represent a stake in their businesses. Security Token Offering, as opposed to the…