With decentralized technologies increasingly making inroads into a wide range of industries, it should come as no surprise that blockchain companies are seeking to diversify and expand their global reach by developing new products and services. One such company is enterprise, technology services and solutions provider Blockchain App Factory, which announced its move into security token offerings (STOs) in India this week.
What is Blockchain App Factory?
The brains behind Blockchain App Factory describe it as an ‘end-to-end permissioned and crypto blockchain solutions company’, and more succinctly as an ‘innovation-driven company’. Blockchain App Factory is expanding its portfolio of services by launching its Security Token and White-Label Exchange Development. The company boasts a roster of over 25 clients from the blockchain/crypto spheres. These include major players such as Li & Fung, whose automated supply chain handles up to nine million deliveries per day, and smaller operations like a cryptocurrency startup aiming to benefit from its country’s progressive attitude to blockchain technology.
Blockchain and STOs
The blockchain concept is inevitably linked to token generation events, but the lack of transparency regarding companies generating funds via this method has meant that financial regulators such as the American Securities and Exchange Commission (SEC) have been desperately trying to protect investors from scams and other fraudulent behaviour. Despite a need for institutional investors to become involved with STOs to aid stability, these investors are still wary of the cryptocurrency market. James Harper, Director of Sales & Business Development at Blockchain App Factory had this to say about ICOs:
“The present state of ICO is riddled with roadblocks because many companies lack the clarity of ICO’s purpose and the Blockchain space. And so there is a hesitancy among the institutional investors to invest in ICO, solely because of the non-regulatory compliance, lack of financial transparency and the volatile nature of the market.”
Benefits and Challenges of STOs
Security tokens offer more stability and legitimacy than ICOs and are beneficial for investors, as they help to digitize illiquid assets such as real estate, equities and security bonds. In addition, strict regulations and limits provide protection and therefore peace of mind for both companies and investors. Currently, however, it is simply inconvenient and challenging to create STOs. Few cryptocurrency exchanges actually offer the facility for trading in them, a situation which is obviously less than ideal. That said, the Blockchain App Factory team believe a shift will take place. James Harper further commented:
“Many traditional companies will delist from traditional stock exchanges to move into blockchain due to high barriers to entry and the exorbitant cost for regulatory compliance. Traditional methods of raising capital like Venture Capital, Bonds, Stocks will be tokenized. We expect real estate especially the commercial real estate will be the first movers into the STO market.”
The Future of Blockchain-based Funding?
In recent years, token sales have raised capital funding to the tune of billions of dollars. With the introduction and proliferation of STOs–which are more advanced and secure than ICOs and could eventually surpass them–there are potentially trillions of dollars to play for. If Blockchain App Factory plays its cards right and provides innovative and effective services in this field which prove to be popular, there will be obvious benefits for developers and investors alike.
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