Jesus Rodriguez writes often about tokenized securities and where the space is headed. His latest article discusses the future realities for tokenized securities in 2019 based on where the industry has been throughout this year.
Observations for 2019
1) Many security token projects will be forced to shut down. The market is currently undercapitalized and cannot survive a long and slow development.
2) B2B security tokens will become increasingly relevant. Rather than real estate, the next rush might come from enterprises selling to other enterprises.
3) Permissioned blockchains are to be expected. Business, frankly, want security especially in B2B issuances and are likely not going to do that on the public chain.
5) Tokenized debt protocols will emerge. 2018 was all about equity for tokenized securities, but tokenized debt vehicles are just as pressing.
6) Security token exchanges have been a major disappointment. 2019 will likely be a bizarre year for exchanges since liquidity and tradeability concerns will likely not be resolved in the short-term.
7) Specialized markets for security token marketplaces might thrive. Although exchanges have been lackluster, specialized platforms for specific security token types may be more attractive to investors.
8) Non-Ethereum blockchains will launch their own security token standards and frameworks. This is to be expected: after all, Ethereum has tons of competition.
9) Sidechains will be absolutely necessary. Some of the core features, such as disclosures and privacy, currently cannot function on the Ethereum blockchain, for example. Protocols need to be invented to account for this.
10) Standalone security token blockchains will be irrelevant. With the dominant players already establishing their blockchains, launching “a new blockchain specialized in security tokens in a year might be almost irresponsible.”
Stock exchanges will begin to take notice. Given that interest is growing by established stock exchanges, we can expect to see a pilot for security token trading sometime in 2019.