Security Tokens for an Underserved Market
One of the things that drove VCs to ICOs was the ability to have a liquid investment in a startup. Now, ICO main sales have dwindled, just like the net capital flowing into ICOs. As STOs are gaining momentum, it is important to recognize the importance of secondary markets for tokens.
Money from traditional investment markets initially drew closer to tokens due to the liquidity provided by secondary markets of tokens. Due to this, for security tokens to reach scale and adoption, they would inherently need to be sellable, with ease, on secondary markets. There’s currently a scramble for security token platforms, but a platform alone is not enough. An inclusion of secondary market for security tokens must be present so that security tokens include the complete benefits tokenization provides.
A South Africa-based company, Mobu, is launching an STO platform that includes a secondary market for security tokens. The company has some unique advantages that other STO platforms are not able to leverage.
The Road to a Security Token Exchange
Launching a security token platform is not the challenging aspect of the shift to STOs, but launching a security token exchange along with a STO platform is.
Mobu has been given the right to purchase a stake in a South African stock exchange. Stock exchanges are designed to trade securities and have the licenses needed to fulfill the legality of their operations. By having equity in a stock exchange, Mobu can get acquainted with the regulatory measures needed to launch a functioning securities exchange in South Africa. The company’s aim is to deliver, to the South African market, a new technological solution that can bolster the region’s financial sector. STOs can provide just this.
Mobu is developing a STO platform with its token standard. The MOB20 token can include the requirements that need to be met for ownership. This allows Mobu to launch security tokens that can meet the demands of the local regulators. Its ownership in a local stock exchange should provide the network needed to gain direct and eased exposure to financial watchdogs. Through the provision of a technological solution that can help the South African securities market gain a larger share of the global financial sector, Mobu promises a beneficial product for the South African financial sector.
The company recognizes that its location may limit the type of STOs that may be interested in utilizing the service. However, the fact remains that the African continent has a large market that is considerably new to the digital age. The region is developing; mobile penetration and internet penetration are growing in the region at an exponential pace. While many people remain unbanked, they do have access to the web. Security token offerings could be the fundamental investment opportunity within the region.
Moreover, STOs are the more affordable and faster alternative to traditional means of raising capital from equity. This means more local entrepreneurs will have the ability to raise funds from the local market (and beyond), and Mobu’s fiat relay will provide ease of access to fiat investors within the continent who have been a part of the region’s current equity investments.
Africa is a very large market that is increasingly becoming digitalized. While Mobu can capture market share beyond Africa, having a locational reach within the continent gives it a great advantage at capitalizing on a large but underserved market.
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