Security token offering is yet to begin according to an INX executive.
“The current crypto bear market hasn’t had a direct effect on the STO platform INX because STOs are very different from others in the space.”
Although some of the first security token offerings (STO) came out at least four years ago, an executive at the INX cryptocurrency trading platform says that the STO industry has yet to take off.
In a recent interview, Douglas Borthwick, the chief business officer of INX, disclosed that the STO industry is still young compared to the digital asset industry as a whole. This is because companies and individuals are still new in the field.
Borthwick says that there is still a big difference in education between people who know about STOs and those who have never heard of them.
What is an STO?
An STO is a type of public offering that involves the sale of digital securities, or security tokens, on security token exchanges. This is also known as a tokenized initial public offering (IPO). You can trade real financial assets like stocks, bonds, or real estate with security tokens.
INX and the Future of STOs
INX was the first company to raise $85 million through a tokenized initial public offering (IPO) approved by the United States Securities and Exchange Commission (SEC) in 2021. Since then, the platform has listed one public token, the INX token, and five private security tokens, like the Blockchain Capital Token (BCA) (INX).
“We believe the game hasn’t started yet because players are yet to completely return to the field,”
Borthwick said, adding that STOs need more offerings to be more useful.
“As more companies become STOs through a public offering and attract tens of thousands of investors, we’ll begin to see a lot more progress,” he said.
In the meantime, INX is working to solve current problems in the STO industry, such as a lack of education and awareness. The company works closely with financial professionals to teach them about the STO process and its benefits. This, says INX, will lead to more issuers. “It hasn’t taken off yet, but it feels like it’s getting ready to,” Borthwick said.
“Given how well the blockchain works, all assets will move to it, and recent warnings from the SEC mean that digital projects that are currently classified as utility tokens may be reclassified. We’ve made the playing field, and now we’re teaching the rules and figuring out how things work.”
Borthwick said that INX is trying to separate the STO industry from the rest of the cryptocurrency market. “We’re making a difference between STOs and “crypto” because they shouldn’t be put in the same bucket,” he said.
STO Industry begins to show life
The executive also stressed that the current crypto bear market had no direct effect on INX because STOs are “very different from others in the space.” Borthwick said that the crypto winter only affected his company in the way that “investors put all companies that touch crypto in the same bucket today.”
“We don’t borrow money from clients, we don’t take risks with our own money, and we don’t invest in alternatives. Instead, you should think of us as a broker/dealer who helps clients raise capital and then gives them a place to trade. We are different.“
Borthwick’s comments come at a time when the STO industry is beginning to show signs of life. In June, the U.S. STO platform Securitize raised $48 million in a Series B funding round led by Blockchain Capital and investment funds managed by Morgan Stanley Tactical Value. Before, the popular crypto wallet software Exodus went public on Securitize Markets after raising $75 million through a crowdfunding campaign.