Even though some of the first Security Token Offerings (STOs) were launched at least four years ago, the STO sector has yet to take offaccording to an executive at cryptocurrency trading platform INX.
The STO industry is still in its infancy compared to the digital asset industry in general, with companies and individuals just entering the fieldINX Chief Commercial Officer Douglas Borthwick said in an interview with Cointelegraph.
According to Borthwick, there is still a huge educational gap between those who are aware of STOs and those who have never heard of the term.
Also known as a tokenized initial public offering (IPO), An STO is a type of public offering that involves the sale of tokenized digital securities, or security tokens, on security token exchanges.. Security tokens can be used to trade real financial assets, such as stocks, fixed income, or real estate, and use the blockchain to store and validate token transactions.
INX became the first company to carry out a tokenized IPO approved by the United States Securities and Exchange Commission (SEC).for its acronym in English), raising 85 million dollars in 2021. Since then, the platform has listed five private security tokens such as the Blockchain Capital Token (BCA) and one public one, the INX token (INX).
“We think the game hasn’t started yet as the players are just coming onto the pitch,” Borthwick said, noting that more offerings needed to increase STO functionality.
“As more companies become STOs through a public offering, attracting tens of thousands of investors, then we will start to see a lot more progress.“, he claimed.
Meanwhile, INX is focused on solving current issues in the STO industry, such as lack of awareness and education. The company is working specifically with financial professionals, educating them on the STO process and efficiencies, which INX says will lead to more issuers. “It hasn’t taken off yet, but it looks like it’s about to,” Borthwick said, adding:
“Given the efficiencies of the blockchain, all assets will migrate to the blockchain, and given recent warnings from the SEC, current digital projects classified as utility tokens may be reclassified accordingly. […] We have built the playing field and now we are teaching the rules and identifying the process.”
Borthwick said that INX is working to draw a line between the STO industry and the general cryptocurrency market. “We’re distinguishing STOs from ‘crypto’ as they really shouldn’t be in the same bucket“, said.
The former executive also emphasized that the current cryptocurrency bear market did not have a direct impact on INX because STOs are “very different from others in the space.” Borthwick pointed out that the crypto winter only shocked the firm in that “all crypto-related companies are put in the same boat today by investors”stating:
“We do not leverage client funds, do not take risks of our own, and do not take the other side in investments. Rather we should be considered as a broker/dealer who helps clients raise capital, and then provides a platform for liquidity.” . We’re different”.
Borthwick’s remarks come at a time when the STO sector is showing some signs of revival. In June, US STO platform Securitize raised $48 million in a series B fundraising round led by Blockchain Capital and investment funds managed by Morgan Stanley Tactical Value. Earlier, major software cryptocurrency wallet Exodus went public on Securitize Markets after raising $75 million in capital.
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