Click Ventures Expects More Innovative STO Designs in Future

After the cryptocurrency market plummeted, more and more people are paying attention to Security Token Offering (STO), and some even regard it as the straw to grasp at. Carman Chan, founder of Click Ventures, said in an exclusive interview with CoinsNetwork that STO gives a larger imagination and helps facilitate the involvement of accredited investors and institutional investors. When one looks at STO at a global level, the new fundraising method, powered by blockchain with the characteristic of “boundary-less”, has more imaginary space than the traditional way – IPO, according to Chan. She explained that the scale of STO can be larger than IPO with generally one single listing location. For IPO, investors are mostly local, and exchanges in different jurisdictions are competitors. Additionally, in the traditional stock market, the design of shares is quite rigid, while only a small difference may be found in terms of, for example, class of shares. In Chan’s eyes, the flexibility of STO in design is a key to attract accredited investors and institutional investors. STO’s design can be similar to stocks, including revenue sharing, voting rights, and revenues tied to a certain product. At the same time, STO can automate many processes by writing different rules on smart contracts, which is more flexible than traditional paperwork processes. “In the future, we will see some innovative STO designs.” In November 2018, the Securities and Futures Commission (SFC) announced a new approach that tries to bring virtual asset portfolio managers and distributors of virtual asset funds under its regulatory net, and also to monitor virtual asset trading platforms in sandbox. Many people in the industry welcomed the new rules. Chan also agrees that it is easier for the practitioners to take one step forward as soon as possible, and to scale up their business with clear guidelines. “In contrast, in the space of Initial Coin Offering (ICO), things are unclear that everyone is afraid of being trapped. While a token is expected to be a ‘utility token’, it can turn out to be treated as a ‘security token’ by regulators.” There are now already examples of STO, like some real estate development projects. Chan pointed out that they would not invest in such tokens, but are rather, as a venture capital firm, interested in company equities. Nonetheless, she mentioned some startups raise funds through Simple Agreements for Future Equity and Token (SAFE-T), which promises to give investors tokens and/or their shares at certain times, depending on agreement terms between the two parties.