Remember way back when as the financial crisis almost decimated the globe’s financial system? I mean its only been a little over then years so you MUST remember. Well, could it happen again…..only bigger? The answer is yes. Will it? The answer is……be prepared in any event. So, a new asset that wasn’t even around back when the “stuff” hit the fan may be able to prevent a new crisis. The STO (security token) to the rescue? Here is an excellent article and very “right on point” to make the case to look ahead and (hopefully) prevent another panic. (Note: It may take some time to read, but well worth it for the perspective)
Bill Taylor/Fintek Capital
“…Security tokens serve as digital representations of any other tradable financial asset, including equity shares of companies, interests in funds, contracts entitled to a specific slice of future revenue streams, ownership of intellectual property, fractional ownership of real estate and other physical assets, and derivatives themselves. Security tokens can be regulated and effectively managed, making it easy to form capital and setting the stage for a reformed financial service infrastructure. After the experiment with initial coin offerings (ICOs) and utility tokens, the security token offering (STO), private placement offerings and how they are traded on exchanges is being done in a legal way, complying with existing regulations by the authorities in each jurisdiction in which they operate — including existing United States regulations from the 1930s.
With the yield curve inversion coupled with recent downturns and corrections in the stock market, fears of a building crisis are mounting. Many armchair economists predict an economic downturn is a certainty every seven to 10 years. As we reflect on the 10-year anniversary of the 2008 crisis and try to understand the disruption to global supply chains in a new environment of trade wars, it is important to analyze the fundamental problems that led us down this path of economic turmoil and why security tokens can help stave off future financial disasters.
The beginning of the end
By September 2008, the $2 trillion RMBS market collapsed and sent a ripple through the balance sheets of most major financial institutions in the U.S. and abroad. This resulted in a global crisis of liquidity, as both debt and equity markets froze. At the eye of the storm was the bankruptcy of Lehman Brothers, which delivered subprime residential mortgages with seemingly reckless abandon. As loan default rates rose, RMBS portfolios were under increased pressure. This led to the U.S. government issuing the Troubled Asset Relief Program (TARP) — a $700 billion bailout to purchase distressed assets that yielded limited results — and the United Kingdom government’s $850 billion bank rescue package…”