Coinlist co-founder Andy Bromberg said security token offerings (STOs), a fading trend in the cryptocurrency market after the 2018 zeal, will eventually get a second wind.
In a recent episode of The Scoop podcast with The Block’s Frank Chaparro and Ryan Todd, Bromberg said that more traditional assets will be tokenized, although “it’s way further out than people are giving it credit for at that time.” Bromberg's own company specializes in token sales, counting well-known projects like Algorand and Filecoin as its clients.
He further explained in a separate email to The Block that demand for security tokens, or tokens that represent real-world assets, is still lacking. Most investors still choose to invest directly in traditional assets and shy away from cryptocurrencies.
This is mainly due to the uncertainties clouding STOs and the readiness of traditional ways to invest in assets. For example, Harbor’s $20 million token sale belly-flop, in which it attempted to tokenize student dorms, adds a good footnote to the fear of STOs.
“They (investors in traditional assets) are used to the ordinary way of investing in these assets, and there's little incentive for them to onboard to the crypto ecosystem. And on the crypto investor side, we've seen few of them interested in this sort of diversification -- or, if they are interested, they simply do so in the more traditional sense,” said Bromberg.
STO lost its traction in 2018 as compliance issues mounted and the Securities and Exchange Commission sought to register these tokens as securities. However, recently Blockstack became the first company to obtain the SEC’s approval to conduct a token sale under Regulation A+, a fast-track for smaller companies to publicly raise money. However, doubt remains among market experts whether Blockstack's approval will indeed be a boon for token sales.