Initial coin offerings have turned out to be a huge liability to the world of finance. This is not only because a lot of them are absolute frauds but because most of these tokens are securities. As a result of this, people are to witness an increasing list of projects which violate securities law, especially in the United States. This is where Polymath enters the scene, as this platform helps companies issue securities token.
Polymath and the Securities Tokens
It is quite obvious a lot of the companies taking the ICO path offer something that they legally can’t without regulatory approval. Thus far, there have been practically no ICOs whose tokens are not made to gain value over a period of time from speculation and product development. Therefore, all of these projects are in violation of existing securities law, something that regulators are actually wary of. This situation has become quite obvious in the United States as of late, with the SEC conducting crackdowns on different projects in the past weeks.
Improving the situation will not be a walk in the park. Many ICO projects are now avoiding US-based investors, instead of taking the proper legal move in order to avoid any consequences in the future. Despite of this, there is option number 3, which comes in the form of organizing a securities token sale on a regulated platform. Polymath seeks to provide that very service although it is still too early to predict its success.
Specifically, this new platform will serve as a securities token issuance solution. So far, it has collaborated with three companies seeking to combine the ICO concept with securities tokens. It is a positive sign that some companies are bluntly admitting that are indeed issuing securities tokens and not anything else. Other ICO teams could learn something from this, as it is no longer important what name you have for your token if it is still in paper.
Amazingly, one of the partners of Polymath turned out to be Ethereum Capital. Although the second project has yet to make any major media buzz, it is a real estate investment trust centered on commercial and residential housing in Latin America. For this purpose, the team wants to introduce an asset-based crypto. However, it is still quite uncertain if this project will experience any level of success. In the event when even Ethereum Capital fails to issue its token on the Ethereum blockchain, it becomes apparent that Polymath may be onto something else.
With this new platform made available to the public, issuance of securities tokens becomes easier. Furthermore, said tokens can represent shares in the traditional financial assets and investment vehicles. The idea of digital tokens has a lot of advantages, since they are easier to use and trade, not to mention a little bit cheaper too. Whether or not other companies will follow Polymath’s initiative moving forward remains to be seen.
Finally, no one can deny the success of initial coin offerings in 2017. At the same time, the regulatory uncertainties and its potential consequences should not be ignored either. Collaborating with companies that have knowledge on how to issue tokens – even if they are securities – is an alternative more companies should explore. At the moment, it appears most groups will continue issuing tokens on the Ethereum blockchain and not worry of legal matters for now. It is a bold approach that might come back to bite them in the rear someday.