In the past few years, with crypto being the hottest thing in the town, we saw an up-rise in security tokens as well. The potential of security tokens is just in the cradle phase of being realized. These tokens are now facing what utility tokens had faced during their introduction; to be taken seriously by investors.
I had an opportunity to sit with Antoine Tardif, CEO of a platform, Securities.io, which lists security tokens and publishes news about the tokens. The platform is focused on adding innovative, functional security tokens and bringing them in front of the mass. As per Antoine, the security tokens have a long way to go and have plenty of scopes to improve. The objective of the news platform and token listing site is to help security tokens attract investors.
How did the conversation go? Let’s read.
- How did the idea of launching Securities.io come about?
As a cryptocurrency investor, I could see a transition in the marketplace from utility to security tokens. I was witnessing first-hand the evolution of the marketplace, but I was becoming frustrated with the lack of resources that focused exclusively on tokenized securities.
Seeing this void in the marketplace we set out to fill it.
- Why is the focus only on security tokens?
Serious institutional investors are not taking utility tokens seriously, and that’s because of the lack of financial transparency when it comes to utility tokens, the lack of regulated exchanges, and the risk of getting hacked.
Security tokens will be regulated, and they will be trading on supervised exchanges. The tokens will also have KYC baked in, meaning if there is a hacking, the tokens can be returned to the originally designated token holder.
Token holders also have ownership rights which can include dividends and revenue sharing.
- How do you think the security tokens will benefit real-world applications?
This will most benefit venture funds and regular investors by increasing liquidity. This will, in turn, increase the amount of funding available for start-ups.
Currently, there’s a problem in the marketplace where angel investors and venture funds need to wait for an average of 5 to 7 years to exit an investment. On average it takes 5 years for a company to be acquired, and it takes 7 years for a company to go IPO.
Often this timeline can exceed a decade, and sometimes a company just wants to stay small and will never be acquired or go IPO. In this case, the investor has no option except to avoid investing in non-scalable small companies.
With a security token, even with a mandated 12-month holding period before you can liquidate the tokens, the token offers significantly more opportunity for the investor to exit an investment.
With this opportunity for exits, investors will be better positioned to invest in new start-ups or other types of securities.
There’s also the tokenization of real-world assets such as real estate. This will open the door for smaller investors who are currently locked out of specific markets. For example, an investor in Dubai who think real estate in New York is going to increase can easily buy tokenized real estate and become involved in that market without having to fly to America.
- Are there any specific criteria for listing the security tokens on Securities.io?
Currently, there are not many tokenized securities so we are able to manually review each STO to reach out directly to these companies. Once the volume of STOs increases we will only list STOs which launched by using a token issuance platform that has partnered with us.
- Till now, which security token exchanges in your opinion are leading the market?
The marketplace is new, there’s only one current exchange which is getting any sort of traction which is the OpenFinanceexchange. I personally believe this market will only take off once the tZERO exchange launches which is scheduled for August 6, 2019.
tZERO is a subsidiary of overstock.com and is the brainchild of Patrick Byrne. This is the exchange all the institutions, family offices, and serious investors are waiting for. Once tZERO launches we should see a rapid increase in market adoption of tokenized securities.
- What steps does Securities.io take to prevent scams and fake news on security tokens from being published?
Fake news is a serious concern. Currently, all press releases are personally reviewed by our team prior to publication. We’ve had several unregulated ICOs attempts to get listed by pretending to be STOs. We’ve also had fraudulent websites attempt to get us to profile them.
We carefully review requests. The first thing we do is review the team, followed by the project, and we perform extensive due diligence which may include reaching out to our network to vet new projects.
Since we expect an influx of new STOs in the 1st quarter of 2019, we plan on partnering with market-leading token issuers. Token issuers perform their own due diligence prior to approving the launch of an STO, and we will be able to piggy-back off this to only list reputable STOs.
- What benefits will an STO receive on partnering up with Securities.io?
We have ambitious goals which include becoming the market leading resource for tokenized securities. This will increase the exposure that STOs receive.
STOs that partner with securities.io will receive several benefits including free press releases which will be permanently attached to their token listing page. Partners will also receive an enhanced listing which includes details about institutional investors, and a competitive analysis. We will also enable investors to communicate with the STO directly from the token listing page.