Security tokens seen as next trend in cryptocurrency trading even as regulations remain unclear
- The ‘second generation’ tokens derive their value from external, tradeable assets
- They differ from earlier cryptocurrencies like bitcoin that are used for payments or value transfer
As the roller-coaster price swings of bitcoin, which has plunged 80 per cent from its peak in December 2017, become a norm, some cryptocurrency traders have shifted their focus to trade “second generation” crypto tokens – security tokens.
One of them is digital asset broker OSL which has started trading stable coins, one form of asset-backed tokens, in the over-the-counter market.
Some industry players also refer to asset-backed tokens as security tokens.
Chief executive Wayne Trench said security tokens would be the next trend in global crypto asset trading in 2019, and urged for clearer regulation in Asia for their issuance and the trade.
The broker currently trades four types of stable coins, whose values are pegged one-to-one to another stable asset such as the US dollar and other hard currencies. Over the past three months, the turnover of all four coins had surpassed US$5 billion each, Trench said.
He said the firm was also technologically ready to expand its services to other security tokens, which are cryptographic tokens that pay dividends, share profits, or invest in other underlying assets that generate profits for their holders.