San Francisco, November 2nd, 2018 – Lithuania is poised to be among the first European countries to host a security token offering (STO) event, as DESICO is going to leverage this capital raising method later this year. The move is part of the country’s ambition to reach and maintain a leading position in the security token industry.
The Baltic country understood the potential of blockchain technology at an early stage. In mid-June of this year, Lithuania’s Ministry of Finance released a document comprising initial coin offering (ICO) guidelines. However, as the ICO market is fading, primarily because of the increased number of scam projects, the country is open to embrace the security token space, which has already secured immense hopes from financial experts despite finding itself at a nascent phase.
Lithuania became one of the most important fintech hubs in the world thanks to its blockchain-friendly initiatives. Lithuania is often compared to Malta, which has established itself as a blockchain hub after opening the door to many cryptocurrency and ICO-oriented firms.
Last month, Joseph Muscat, Prime Minister of Malta, said in a speech during the 73rd Session of the General Assembly of the United Nations (UN) that cryptocurrencies were “the inevitable future of money.” He added that the distributed ledger technology (DLT), an umbrella term comprising blockchain, could significantly contribute to a more transparent and fair society.
As the security token space is growing, both Lithuania and Malta don’t want to stay aloof from the potential benefits of being at the center of this emerging market.
In September, Cointelegraph reported that Malta Stock Exchange’s fintech subsidiary MSX had reached an agreement with Binance to create a security token digital exchange.
In Lithuania, DESICO is working on a platform that provides the full palette of security token-related services, from issuance to trading. The platform is endorsed by the Ministry of Finance, the Ministry of the Economy and its agency “Enterprise Lithuania.”
Besides, Lithuania is one of only a few countries in Europe and in the world that has a legal framework focused on retail investment into security token offerings.
Kendrick Nguyen, CEO of US-based investment platform operator Republic, told Forbes:
“Lithuania’s crypto and crowdfunding framework is a step forward for the global crypto ecosystem. Adoption by more jurisdictions can’t come soon enough, Kendrick Nguyen, CEO of U.S. investment platform Republic.”
Do Securities Tokens Bring Real Value?
Some investors are afraid that STOs are disguised ICOs, which is generally not true. Of course, scammers can reach everywhere, even on traditional stock exchanges. However, unlike ICO-based utility tokens, security tokens are backed by real-world assets, whether it’s company stock or real estate. Technically the two types of tokens are the same, but the latter ones can provide ownership rights, dividends, and have regulatory compliance built-in. Some experts estimate that the stock markets will inevitably move to blockchain in the coming decades.
DESICO CEO and co-founder Laimonas Noreika explained:
“Utility tokens are based on network affect while Security tokens are based on actual performance of the company – no matter it’s a revenue participation note, equity or profit sharing Note. Investors get their returns from the results company delivers.”
If blockchain required about ten years maturing to the current level, the security token space might grow at a faster pace, and Lithuania is keen to gain from this innovation.