An Evolving Marketplace – the Transition from Utility to Security Tokens

dapps blockchainThe juvenile crypto-asset marketplace still requires assistance in cleaning up its act.  Last year’s ICO craze has now proven to be bad news for some and terrible for most.  The crypto gold rush, which only came to a screeching halt just 8 months ago, has left behind too many casualties; many non-accredited investors and speculators were victims to really bad ICO punts.  So many ICO projects performed so bad, exasperated the recent bearish market conditions, with some even reporting over 99% losses from their all time high prices!

Are we in need of a regulatory framework?

The short answer is yes. However, regulators who support the underlying blockchain technology are aware that too much regulation will probably destroy the many promising projects in the pipeline; too little oversight would deem them irresponsible to their duty of protecting the irresponsible retail investor.  The middle ground should evolve with a focus on frictionless points of entry, while maintaining the integrity of the points of entry.  No easy task.

This is not about overcomplicating fundraising as a process, instead, a refining to simplicity.  This brings us to the current STO wave, bringing some needed legitimacy that is friendlier to institutional investors and a catalyst to marketplace consolidation.

Signs of maturity are emerging.

 Several leading blockchain companies, still startups themselves, have recently made significant acquisitions, utilizing their cash rich balance sheets to buy up market share and strategically, vertical and horizontal expansion.

The M&A wave has now arrived to the Blockchain sector:

  • Binance acquires Trust Wallet
  • Coinbase acquired Ethereum exchange platform Paradex
  • Tron buys BitTorrent
  • Bitcoin exchange Bitstamp acquired by Belgium Investment Co NXMH
  • Global Blockchain acquires Atari Founder Nolan Bushnell’s crypto-based X2 Games
  • Lightyear, the company behind Stellar’s IBM Blockchain partnership acquires Chain
  • Wyre acquires Bitcoin smart derivatives platform Hedgy
  • Shapeshift acquires bitcoin tool Bitfract
  • Circle acquires bitcoin and altcoin exchange Poloniex
  • Evonax buys ExchangeMyCoins.com

The Transition has begun!

Defining and acknowledging the overall benefits over their dangers will be one of the most challenging tasks for regulators moving forward.  Fresh new regulatory frameworks are being worked out, providing predictable solutions for the industry while applying better risk management for investors.  In my opinion, this backdrop provides a recipe for a surge in STOs and the new startups have the edge.

– Andrei Popescu

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