InWara - ICO Database, ICO review, Security tokens and more

STO services: Polymesh- Polymath’s ambitious security token blockchain

STO services

Polymath, widely regarded as the pioneers of Security Token Offering and related services in the US, recently made an announcement through a blogpost which caught everyone’s attention. 

The STO issuance platform revealed that it will develop a purpose-built blockchain specifically for security tokens, in collaboration with Charles Hoskinson, co-founder of Ethereum and Cardano.

But why built a new blockchain just for security token? Because current blockchain networks weren’t built with compliance with regulatory norms in mind. 

 

Breakdown of STO issuance platforms

STO services

source

An overwhelming majority of STOs being launched, are on Ethereum. While this platform is greatly beneficial for its relative ease of development and interoperability it is not ideal for security tokens.

Why?

Simply because it wasn’t built with compliance in mind.

Some of the other significant players in the Security Token issuance and management space include companies such as Securitize, Stellar, NEO and Waves among many others. 

Notably, Polymath believes adoption rate of security tokens and security token offerings have not matched with the excitement around them. Pointing to the lack of purpose-built blockchain’s specifically for security token as being the reason for this. Hence the company believes Polymesh, which is built ground-up with regulatory compliance in mind might increase the adoption rate of security tokens and STOs. 

Polymath has also invited Charles Hoskinson as the co-architect of Polymesh. Charles is the co-founder of popular blockchain projects such as Ethereum and Cardano and seems like the right person to help lead Polymath’s new venture. 

 

The number of STOs surge by 130%

STO services

Globally, the number of STOs being launched observed a huge surge of 130% during Q1 2019 with as many as 47 being launched, according to InWara’s Security Token Offering report.

The surge in STO numbers was welcomed by the crypto community with open arms against the backdrop of dwindling ICO numbers. STO stepped into the limelight as an evolutionary change in a hostile environment for unregulated Initial Coin Offerings. ICO projects, especially in the US, ran the incredible risk of being shut down for violation of federal securities laws. 

What laws did ICOs violate? 

The Securities and Exchanges Commission or the SEC believes most ICO projects actually constitute a security offering rather than a simple utility token offering as promoters are touting.To know more about the SEC take on what constitutes as security, check out token taxonomy act explained article. But since most ICO projects and utility token qualify the Howey test the SEC believes these projects are in violation of the Securities Act of 1933 and 1934 and other federal securities laws set down by the regulator.

Register for a free trial

The Most Trusted

Market Intelligence Platform

Get Started