Can Security Tokens Save Crypto From the Bear Market Blues?

"Security tokens will save crypto."

That's what Trevor Koverko, CEO of the crypto project Polymath, told CoinDesk at a blockchain technology festival in Toronto this week.

Alan Wunsche, CEO of the crypto startup TokenFunder and co-founder of the industry consortium Blockchain Canada, told CoinDesk he believes tokenized assets are the future of capital markets.

From Fintech Canada to the Blockchain Futurist Conference, hundreds of people were buzzing about how Canadian regulators are allowing a few heavily regulated startups to sell tokenized securities to retail investors and institutional investors alike, as long as issuers conduct thorough know-your-customer checks and disclose numerous risks.

On Thursday, Polymath even announced several startups will launch security tokens through its blockchain marketplace.

Koverko said tokens are decoupling from "Risky" transactional assets like bitcoin, which he believes are currently backed by speculative value and not "Anything real" regulators can measure.

"We doubled the market for security tokens overnight."

Crypto veteran Joseph Weinberg, co-founder of the brokerage startup Paycase and chairman of the digital identity solutions startup Shyft that Polymath is also partnering with for token offerings, told CoinDesk overzealous regulation could "Kill the whole ecosystem."

Lawmakers might be prudent to recall lessons from Toronto's crypto history.

The draft guidelines would have required crypto startups involved with any transactions worth more than $10,000 to adhere to even stricter standards, handing over indiscriminate customer data to regulators on a routine basis.