Security Tokens: Everything You Need to Know

The excitement in the crypto market is still at an all-time high. Part of the reason for this is new developments in the crypto token realm. The market as a whole is also experiencing a huge surge in terms of investment. ICOs are still pulling in lots of money through different kinds of investors. The regulatory authorities have also not been left behind. The marketplaces and assets are all set to continue attracting the attention of the regulatory realm. But what exactly do you need to know about the market?

Demystifying crypto tokens

Generally speaking, there are two main kinds of tokens that are attracting the attention of investors in the market – utility and security tokens. The latter kind is, however, the main focus of the market right now. Security tokens are an actual digital asset that investors can invest in and make money with. There is a huge possibility that the tokens will start being traded in the very near future and the market is quite bullish because of this. Platforms like Polymath and tZero are already capitalizing on the activity in the market. These platforms, among others, are developing groundbreaking tools that will change the landscape for good.

The standards in the market

Just like any other market, the security tokens market is bound to have some standards over time. Currently, there is no clear path on where the regulators want to take the market. There is, nevertheless, some tools that have already been developed by different authorities to achieve some standards in the market. Two of the most important of such tools are:

  • The Howey test

Basically, the Howey test is all about identifying whether a transaction qualifies as an investment. The test has been around for many decades and it has been applied successfully in different markets. The Howey test is great in the tokens market since it has already shed some light on various assets in the crypto market. It is this test that qualified Ethereum and Bitcoin as non-securities in recent times.

SAFE & SAFT, on the other hand, is all about determining the guidelines of investment in the crypto market. SAFE, which stands for Simple Investment for Future Equity, was implemented first to determine investor shares after an investment has been made. SAFT, which stands for Simple Agreements for Future Tokens, came in to specify investments made in the crypto market. Basically, the goal of these standards is to determine the terms of share ownership by investors in the crypto market.

The future

The crypto market is very dynamic and it is still in its infancy stages. Regulators around the world are thus looking for ways to regulate the market without hindering its growth. Regulators have many possible routes that they could take to steer the market into success. But there is nobody who knows exactly what direction the market will take. What is true for now, is that security tokens are a hot commodity. The duration that the tokens will take while still being attractive is a mystery though.


Staff Writer

All articles published by Staff Writer have been contributed by all our reporters and edited and proofread by our editorial team.
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