In 2018, financial regulatory bodies began to take a more serious look at the blockchain industry. They were particularly focused on ICOs because of the amount of money that was being raised, and the concerns of illegitimacy among some projects. In the wake of increased regulatory attention, the number of new ICOs began dialing back, and a new buzzword became popular in the crypto ecosystem: security tokens.
The concept of security tokens did not come about because of the regulatory clampdown, but has been around for a while. Ever since Ethereum came up with the idea of smart contracts and tokens issued on the platform, some projects have been envisioning a day when all securities can be traded as tokens. The major advantage tokenization gives securities is liquidity and speed of transactions. However, the ecosystem is still a long way from that reality.
What Are Security Tokens?
To understand security tokens, one must first understand securities. A security is basically a…