STO: What's Happened With the So-Called 'Next Big Thing in Fintech?'

As the founder of a platform for issuance and trading of tokenized assets, I would like to share several insights regarding the problems and the future of the STO market.

What's up with the market right now?In its current form, an STO offers a traditional security in the form of a token.

Just like any existing traditional market instruments, tokenized securities may grant rights in digital or physical assets ownership, profit-sharing, or financial commitments.

Let's get real, there is no STO market, and we probably shouldn't aim to have one.

Tokenized security is the tool that has gigantic potential to improve debt financing and equity crowdfunding markets right now.

Even though one of the main selling points of tokenized securities was real investor protection, the main interest in the instrument came from large market players.

Secondary market: The primary problemIf you conduct a small research on how security token issuance platforms promote their products, you might notice that nine out of 10 companies tend to emphasize that tokenized securities are destined to bring liquidity to traditional assets previously considered illiquid.

According to a BlockState report of 2019, there are more than 50 security token issuance providers on the market, and yet, as evidenced by our internal research, none of them currently offer fully operational and regulated secondary trading solutions.

For all the security tokens on earth issued each day, there is no single secondary market in existence.

In my opinion, some will keep on developing their own secondary markets, while others will probably opt to partner with market players who already have the required infrastructure at their disposal.