What’s all the fuss about STOs?
Well, at this point, there’s no one better to explain to the world why there’s so much buzz around STOs than SolidBlock’s executive team.
That’s why our CEO Yuval Wirzberger, Yael Tamar, CMO and blockchain strategist, and Ido Shacham, our board advisor on regulatory and legal issues, sat down to chat with the perennially knowledgeable journalist and BlockTV host Yael Lavie.
The conversation covered everything from the basics – What is an STO? How does it work? – to some challenging questions facing STO and blockchain investment today, such as regulation, and specifically the SEC in the U.S. and the Israel Securities Association here on our home turf.
Yael Lavie took this opportunity to ask us so many questions – including 3 that are among the most common questions we hear these days:
Are STOs essentially the same as ICOs?
Absolutely not! Unlike an ICO, an STO is connected with the base asset and the token is marketed in parallel with the base asset. The value of the STO is literally tied to the value of the base asset, and in this case, with real estate. An ICO in this metaphor is like an untethered balloon: it can float away, which is in some cases what we’ve seen happening with ICOs.
This has led to what Ido Shacham called “a lot of shenanigans,” with investors not really knowing or understanding much about the companies they’re investing in. STOs, on the other hand, represent a coming of age for the entire crypto market.
Yael Tamar also pointed out that STOs meet more stringent regulatory compliance standards.
However, one advantage ICOs had over current STOs is that they were community-based, leading to a lot more democratic opportunities for fundraising. The current STO climate, relying heavily on accredited investors, hasn’t quite reached that point yet.
“I’m looking forward to the time when we can create the type of funding and liquidity tool that will apply to everyone. And that’s in the hands of regulators right now,” she said.
What impact will the recent SEC crackdown and lawsuits involving ICOs have on STOs?
There may not be any substantial impact. Lawsuits against ICOs will probably not affect STOs because of the greater accountability required of STOs—providing fuller disclosure and preventing the risk of scams and fraud. STOs are created from the ground up with regulatory compliance in mind and they’re also rooted in tangible assets.
However, one surprising impact is that we may not be as quick to mention blockchain! STOs are a new type of investment product that happen to be powered using blockchain technology. But as blockchain becomes more and more mainstream and acceptable, and as public confidence in it increases, this is something that can go unsaid.
In the early years of electricity and running water, if you built a new house, you’d probably have mentioned these features. But nowadays nobody mentions electricity or running water as a selling feature – we just assume every house has them. In the future, we believe everybody will want investments that are liquid, fast, and transparent, based around the tightest cryptographic security standards. The details of how we go about doing that are less important.
What are some hot industries to watch for STOs over the coming year?
Other than real estate STOs fueled by SolidBlock, of course, which we’ll have more details about over the coming months, there are a few key growth areas we’re keeping our eyes on.
Ido Shacham identified pharma as a key industry to watch, particularly for drugs that have been FDA-approved. “That’s the kind of business that I think will grow.” However, he added that just as SolidBlock always investigates the value of the base asset, this is one piece of the puzzle that must be done carefully in any industry. “We don’t accept every valuation we’re given.”
Yael Tamar also mentioned the 2 million people worldwide who remain unbanked. These are populations who are eager to embrace advancement yet lack a stable, regulated financial ecosystem. “I want to see a lot of projects there… even in real estate or in cleantech or infrastructure tech. Formalizing ownership, asset ownership, and investment.”
STOs don’t just have to be about making the wealthiest companies and individuals wealthier – we believe one goal should be doing good and creating opportunity where none has existed before.
What do you think?
We covered so many hot-button topics during this chat that we can’t really share the whole thing in a nutshell like this. But we guarantee that watching the full discussion – almost half an hour entirely devoted to STOs—will answer almost any question you might have had about real estate and STOs.
And if you do still have questions after watching, or you’d like to see how an STO might help you and your business, please get in touch with our team anytime.