Forkast

Episode 1 - The future of digital securities

Forkast's New Segment - Tokenize the World. Host Angie Lau and Henry Chong discuss (AKA Crypto 2.0) in 2022. Fusang believes that #securitytokens can offer the best of both worlds as we tokenize the world, one security token at a time!

What are the key developments in the digital security space we've seen in 2021, and how do you see that changing?

Security tokens will inevitably be the next phase of the evolution in capital markets. Almost all shares today are fundamentally represented by pieces of paper. And even if they aren't physical pieces of paper, we have pictures of paper, PDFs. Tokenization will allow us to actually digitize shares for the first time in 400 years. And once we do, we can start to marry the best benefits of crypto assets with the real-world securities out there (shares, bonds, and funds), and allow access to a global investor base, the kind of products that they just couldn't get access to ever before.

Now we know there's been a lot of bad press in the past over ICOs and fraud cases. What do investors need to understand about  STOs to allow them to participate a little bit more?

The interesting thing about security tokens is that we can take the best elements of technology while keeping the best elements of how traditional securities legally work. There's no particular reason to redo how a share works legally, we just need to move away from the paperwork to a digital token.

A recent study shows that by the end of 2030, 25% of all securities, publicly listed securities, are going to be tokenized. That's about 4 trillion USD worth of total issuance volume. I actually think that's a bit conservative, because I don't think that security tokens are a new asset class, it's just a new technology layer. But just like how we shifted from offline shopping to e-commerce, once we can tokenize these securities, we can start to allow people to create missed trade and transact them in a radically new way.

Security tokens represents a lot of benefits for investors, but what are the cautionary things that they should be looking out for?

Once you can take real assets like securities, digitize them, put them on the blockchain, the single question is, what is the underlying assets? And people always forget that we still need to care about the quality of the underlying company.

The most exciting thing that will drive security tokens in 2022 is when we see exciting companies, crypto companies, decide to list and do full-fledged IPOs using security tokens instead of listing on traditional exchange venues.
Just a few days ago, there's been a lot of news about OpenSea talking about a potential IPO, a traditional paper-based IPO. And that has led to a bit of a revolt among the community to say ‘‘Wait a minute, you as a platform, you're exciting, precisely because you can create these digital tokens and open up access in a radically new way, why don't you yourself create a token so that the community that got you to where you are today can now participate?’’.

I believe that there's no reason why you can't take a token, marry that with a security and have the best of both worlds. A token that gives you real shareholding in a company, while also giving you all the exciting utility benefits that has got the crypto market to where it is today.

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