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Who Stands To Benefit From The Digital Securities Market?

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The emerging digital securities ecosystem has the potential to create economic opportunities for years to come. I’ve already discussed one of the key benefits for ICO investors – their early-to-market knowledge and experience – but a number of other groups will also see benefit from the emergence of this new asset class.

The players in the following key roles of the nascent digital securities ecosystem are in a position to see more customers and improved profitability:

Community Management:

SIMETRI Research

Online forums for traders have existed for decades. But they were not generally hosted, supported, and managed by the company owning the security. The discussion can get pretty tense in some of the altcoin channels and forums, so management firms may be brought in. These firms could see an uptick in business as digital securities become a reality.

For community management firms, opportunities may include:

  • New, professional customer base

  • Improved community discourse

  • Longer project shelf-life

Investors:

There are two classes of investors who invest in blockchain based vehicles: those currently in cryptocurrencies and altcoins, and those who are not. Crypto holders are likely to be presented with an opportunity to diversify as digital securities come to market.

For example, those who moved their BTC or ETH into a digital security like SPiCE VC in Q1/18 would have preserved not only the original value of their capital, but would also have seen a 38% increase in value of through the SPiCE VC token.

For current crypto investors, opportunities include:

  • Moving gains into asset-backed securities where the net asset value (NAV) guides price instead of network use.

  • Moving gains into a regulated instrument.

  • More secure holdings. If a wallet’s private is forgotten or stolen, the securities can be voided and reissued.

For non-crypto investors, the opportunity include:

  • Access to regulated digitized assets that are currently only available via the blockchain

  • Early adopter access to funds and infrastructure that in the future may represent returns gained by second wave Internet platforms.

  • Improved liquidity of traditionally illiquid assets such as venture capital funds and real estate.

  • Improved management of digital assets with access to 24/7 markets and exchanges

Issuers:

Not all opportunities in digital securities are investor focused. Since practically any asset can be digitized and equity and profit sharing can be applied to practically any business model, the opportunities are potentially massive.

  • Coded compliance features for issuance and lifecycle management

  • Easier capital formation

  • Collect funds in both traditional fiat and crypto from a global market

  • Quick and easy dispersal of digital shares

  • Use digital security for communication and voting

  • Ability to change business model and instantly apply changes to smart contract

  • More value for investors through increased liquidity on 24/7 global exchanges

Exchanges & Broker-Dealers:

Exchanges and marketplaces are the backbone of access, liquidity and value. It is here that individuals and organizations buy and sell securities. These exchanges require a broker-dealer to legally facilitate the transaction between buyer and sellers.

  • Drive demand for IT blockchain professional services

  • New markets, new products and new investors that did not exist one year ago

  • New type of security instrument to broker and advertise

  • Access to investors on a global scale

  • Markets open 24 hours a day 7 days a week

Legal Counsel:

Digital securities offer a new and exciting venue for legal services. Firms specializing in legal services for fund raising, VCs, start-ups and asset management now have a new high demand market to service.

  • New customer base

  • High market demand

  • Exponential growth curve

  • Differentiate from competitors

Digital Securities Storage:

The cryptocurrency ideology is based on self-reliance. Individuals are responsible for their holdings. Lost or stolen private keys, passwords or improperly sent funds is a common outcome for many. In the regulated finance world, these problems don’t really exist because of custodial and escrow services that store and transfer funds. They will become big players in digital securities.

  • New customer base

  • Drive demand for IT blockchain professional services

  • Participation in creation and implementation of digital ledger technology

  • Increasing revenue stream as accounts grow

As the digital securities markets grow, the economic value for all players building the digital securities ecosystem has great potential.

Again, a key point to remember is that the creation, buying, and selling of securities has been around for a long time — long before computers and the blockchain. Digital securities are just a new and better vehicle for managing what has always been a core market for global economies.

If you look at digital securities in this way you will understand that the underlying securities market isn’t going anywhere. It’s just about to get a whole lot better from a compliance, convenience, and efficiency standpoint for everyone involved.

 


This article is presented as part of the Crypto Briefing focus on Security Tokens and Digital Assets.

Crypto Briefing does not accept any payment or financial benefit from expert guest authors.

 

DISCLOSURE

Authors at Crypto Briefing are invested in cryptocurrencies. The author of this post may be invested in digital assets mentioned here.

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