Hi @blockshine, this is certainly good news for crypto market.
Whilst I think LCOs have the potential to be a big thing in the future, I don't think it will be as early as 2019. The reason being, listing securities is a long and arduous process and having listed a company, directors are obliged to comply with stringent regulations, which in itself could be an impediment. I have known of companies de-listing themselves just to be relieved from these hassles.
I remember reading a post on whether STOs (Security Token Offerings) would eventually replace ICOs. Just wandering what are the differences between STOs and LCOs?
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Got it, @blockshine. Thanks for taking time to explain.
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Dear @blockshine
Thank you for this amazing reply.
So bottom line is, that some ulitily need to be created in the first place, right? So let's say you have existing company which only wants to raise more funds and sell part of their ownership (the way we could do it with stock markets). Or same company only were interested in raising money via IPO.
And this company doesnt have a need to develop utility token at all. In that case STO should be solution, is that correct?
Should LCO be considered replacement for ICO? Im still trying to undertand it.
Yours
Piotr
LCOs will definitely attract institutional interest if they are created by 'blue chip' listed companies with excellent financial track records. It is definitely an exciting and promising development for the crypto sphere.
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I feel that Singapore regulators may take the cue from more established financial centres like US, Switzerland and Hong Kong before giving the green light for LCOs in Singapore.
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Are you from Singapore @investprosper?
Totally agree, @investoprosper. I suppose it would take a few 'blue chip' listed companies to get involved before the first domino falls!
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Hi @investprosper
Great comment.
Would you be able with your own words expalain to me what is the difference between STO and LCO?
Yours
Piotr
Hi @crypto.piotr
Based on my understanding, an LCO is a financial instrument for representing the bond, warrant or rights issues of a listed company, while a STO commonly represents the underlying shares of a company. And yes, I am from Singapore. :)
Thank you @investprosper for your kind comment.
I appreciate it a lot.
Yours
Piotr
Dear @devann
Great comment buddy
I also believe that 2019 will be very calm and quiet.
Seriously? OMG. I never knew about it.
That is indeed a great question and Im myself trying to figure it out.
Cheers
Piotr
Dear @crypto.piotr
I think the main difference between STO and LCO lies in the ownership of the company and the company's right to issue dividends.
In the case of a STO, it being a security, it gives the holders of the security tokens a share in the ownership of the company. In addition, the company may pay dividends to these holders of the security tokens, if deemed appropriate.
Whereas, in the case of a LCO, the utility token is not a security and therefore the token holders do not have a share in the company and are not entitled to dividends the company may pay to its shareholders. Of course, if the token holder happens to also hold the shares of the company, he will be entitled to the dividends paid by the company as a shareholder but not as a token holder.
@blockshine, would appreciate you input to confirm, amend or expound on my comments above.
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@blockshine, it appears that a new form capital is born.
Besides debt capital and equity capital, now listed companies have another choice to raise capital, which is neither debt nor equity - the LCO capital.
From the perspective of a listed company, the company doesn't have the burden of a debt (the token holders are not lenders) or the traditional responsibility to its shareholders (the token holders are not shareholders).
If a token holder has concerns about the management of the company, he cannot attend the shareholders meeting to voice his concerns.
However, I predict that in the future, these developments may eventually lead to amendments to the Company Acts of the respective jurisdictions to provide better safeguards to the token holders. Who knows, the legislators may even create a third type of shares, besides the ordinary shares and preferential shares, calling it, say, crypto shares!
Alternatively, in future, you may even see companies treating token holders as lenders and providing security to them in the form of debentures! These token holders will then get a fixed interest against their loan secured by the debenture whilst being able to participate in the token economy.
Don't get me wrong. I am not saying that LCOs are bad. They are certainly better than ICOs. I am just brainstorming to predict the future possibilities.
cc @crypto.piotr, @reverseacid @julianhorack
Dear @devann
Yet another amazing comment buddy.
Wow. I've lost you here. To smart for my little brain :)
Yours
Piotr
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