🚨 [Analysis] The challenge with security token offerings – Crypto Bobby

There is a current switch from companies running utility token Initial Coin Offerings (ICOs), to Security Token Offerings (STOs). However, the following are some reasons why STOs are challenging and less attractive to investors:

• Smaller investor pool – When securitizing tokens, companies are restricted by accredited investor requirements, limits on the number of US investors, etc., all of which reduce the size of the investor pool.
• Lockups – Due to regulatory requirements, many of the Security Token Offerings will have lockups for one year, leading to higher opportunity costs and the inability to flip ICOs.
• Limited speculation – When you tokenize a real world asset or equity, it removes the speculative nature of the investment because you can actually derive a valuation for the token, which is good for the long-run but not attractive to investors who are in it for the short run.
• Being too early is the same as being wrong – Security tokens are a logical gateway to bring traditional investors into the world of cryptoassets, however, it's still very early in that process.

Security tokens will likely help to curb the excessive speculation and Wild West ICO cowboy antics, but the general cryptoasset market will be slower to appreciate the regulatory safety of STOs. Until the companies launching STO’s are able to address some of the concerns above, mainstream security token investment will experience slower adoption.