By Matthew Sullivan, CEO of QuantmRE
The crypto asset market currently stands at $265 billion¹, yet while this is a fraction of other mainstream asset classes, there is no denying that cryptocurrencies are set to play a much larger role in the financial services sector.
This is partly due to the massive growth in investor interest, but it is also because new developments in tokenization are offering crypto traders the chance to diversify their holdings and invest in tangible assets.
Many investors started their crypto journey by buying Bitcoin or Ethereum and then diversified into the lower priced and more volatile altcoins. As the market has developed, so has the desire for a wider range of products that leverage Blockchain technologies. Now, new and more sophisticated products are entering the market, such as tokens that are tied to assets.
Since as early as 2014, there has been a proliferation of Initial Coin Offerings (these ICOs are also described as token launches or token generation). In 2018 we have seen an increasing number of Security Token Offerings, or STOs, which represent the next generation of token offerings. STOs give crypto investors access to real world assets that have been tokenized, with each token representing a digital asset that operates like a traditional share or stock in compliance with securities regulations.