Liquefy, a Hong Kong-based Security Token Offering (STO) platform has recently received $2.6 million in funding from investors. This round of funding was from Ideanomics, NEO Global Development, Kenetic, and East Chain, and with this, Liquefy has now received a total of $3 million in funding.
This substantial investor funding assumes significance since it demonstrates that investors are increasingly appreciating the importance of STOs. It also shows that the market has realized the importance of comprehensive platforms for STO.
The concept of Security Token Offering (STO) brought a key change to how investments were pouring into the blockchain start-ups. Initial Coin Offerings (ICOs) became very popular in 2017, and their popularity continued in the first part of 2018.
ICOs enabled retail investors to invest in blockchain-crypto start-ups. This was novel since most matured markets allow only accredited investors like Venture Capital (VC) funds to invest in risky start-ups. However, many ICO scams took place since scam stars took advantage of the fact that ICOs operated outside the regulations.
ICO token issuers often promised high profits and this fact puts these tokens in the category of securities investment contracts. However, most of them didn’t comply with securities regulations, prompting regulators like the Securities and Exchange Commission (SEC) in the US to step in and launch probes.
STOs comply with the securities regulations, therefore, they are on the right side of the law. What’s more, unlike traditional securities investment contracts, STO tokens can be sold in crypto exchanges, thereby offering higher liquidity.
STOs can help tokenize traditional assets like stocks and real estate, therefore, there is potentially a multi-trillion dollar market for STOs. However, it’s not easy to launch STOs, which makes STO platforms like Liquefy important.
Why Security Token Offering platforms like Liquefy matter?
The ability to tokenize traditional assets apart, businesses can also use STOs to tokenize more assets, which makes STOs important. However, launching an STO isn’t easy! Securities regulations are complex in most countries, and businesses need to undertake several preparatory steps before they can launch STOs.
For e.g., launching an STO in the US involves the following processes:
- Registration with the SEC;
- Filing of public documents;
- Publishing a prospectus;
- Filing of quarterly and annual reports;
- Using Alternate Trading Systems (ATS) with brokers registered with the SEC.
As anyone can see, it takes considerable expertise, time and effort to comply with these processes. STO platforms like Liquefy can help with these.
Liquefy platform enables businesses to tokenize assets like private companies, public shares, funds, real estates, etc. using blockchain. The platform provides several valuable tools, e.g., Decentralized Company Secretary (DSC), Compliance-as-a-Service (CaaS), etc.
The STO landscape is a fledgling one, therefore, investments from accredited investors like VCs are important. Liquefy was founded in 2018, and the fact that the company has been able to attract investments to the tune of $3 million augurs well for STOs.
Good news for Security Token Offering platforms
A report quotes Adrian Lai, the CEO of Liquefy to inform that the company will utilize this investment to expand its presence to 3 more markets in 2019. STOs could well be the future, and investments in STO platforms are important for ushering into this future.
