How to launch a Security Token Offering (STO) is a series of posts taken from the Ebook we published in January, Tokenized Securities. It is a straight forward and comprehensive guide that walks issuers through the main steps involved in the process of launching a Security Token Offering (STO).
In part one, we introduced the topic area and defined tokenization. We highlighted the difference between utility tokens and security tokens in part two. For parts three and four, compliance aware tokens and the benefits of tokenization were the respective topics. Now, let’s take a look at the challenges for traditional asset tokenization.
Blockchain technology offers the possibility of transferring part of the regulatory and compliance processes on-chain in the form of smart contracts. Transparency, accuracy and immutability are all needed when it comes to governance, which are all characteristics of blockchain. However, the technology will raise technical challenges, regulatory questions, legal grey areas, and changes of processes that could be difficult to set up for issuers and their agents.
Mass adoption of traditional asset tokenization is going to take years to fully develop. Technology evolves quickly, but regulation does not. Traditional asset tokenization represents one of the greatest opportunities, and greatest challenges, that global regulatory agencies will face over the next decade. It could slow down innovation and create impassable walls for some issuers.
Tokenization of traditional assets will cause disruption to the status quo. Some systems that are in place today may not work the same way in the blockchain world. The current systems will have to evolve and some key players will fight against innovation. The challenge is that there are stakeholders that benefit from the status quo. These parties have incentives to resist change, and they will do what they can to slow down adoption.
This content is inspired by the Ebook Tokenized Securities. Click here to download.