PwC’s global consulting subsidiary Strategy& suggests that the Security token offerings (STO) have been gaining more traction than the initial coin offerings (ICO), in its fourth ICO and STO report that was developed in collaboration with the Swiss Crypto Valley Association.
The joint report states that STOs “are not fundamentally different from ICOs,” the STOs are basically “a more mature and regulated form” of fundraising. It noted that as per the definition of a security, the tokens sold under an STO can provide investors with various financial rights.
Released on March 8, the report further claims STOs combine a number of ICO features, including low entry barriers for investors, traditional venture capital and private equity fundraising characteristics in likes of Know Your Customer and Anti-money laundering regulations.
While the overall number of both STOs and ICOs has seen a significant decline in the second half of 2016, allegedly due the prolonged crypto winter and because of a shift from the ICO to the STO model. The report also presents some data to support its points, out of the estimated $19.7 billion raised by 1,132 ICOs and STOs in 2018, two projects managed to raise $5.8 billion of the volume.
One of them was the EOS Foundation that carried out the largest ICO in history by raking a reported amount of over $4 billion in June 2018. The other one being the ICO by the Telegram messenger, it raised an also impressive $1.7 billion in two private ICO rounds for its TON crypto platform.
The report also factored in the trend of the tokenization of commodities like gold and oil, even the tokenization of intellectual property. The US SEC has had reminded investors multiple times that tokens sold in ICOs are in fact securities under U.S. law, and thus should be registered with the agency.