- Token sale technology platform CoinList has secured its first token sale of the year
- President Andy Bromberg tells The Block he sees a strong market for STOs over the next six months
- He also discusses what motivated the firm’s recent business restructuring
Love them or hate them, security token offerings (STOs) look to be creeping up the agenda for crypto startups hunting for funding.
CoinList announced Thursday the first token project to leverage the firm’s technology in 2019. Ocean, a decentralized data protocol, is targeting an $8 million fundraise in March. As for CoinList, the firm’s president says it’s the end of the token hiatus seen in late 2018, with five deals expected over the next six months.
“The industry has matured a lot over the last year and a half,” CoinList’s President Andy Bromberg told the Block. “Token issuers are coming to us now with more stable token economics strategies. There’s an overall thinking of how they and their network can evolve over time. Before there was a lot more back and forth with them.”
CoinList, which raised $9.2 million in 2018 in a Series A, has evolved its own business too, Bromberg said; from making the platform free for token buyers to a rather significant remodeling of its raison d’etre.
“We are no longer providing investment advice to the investor. We are merely vetting projects — allowing investors to do their own due diligence. We are providing marketing services.”
The step back away from being a Registered Investment Advisor and charging investors is no small step. But Bromberg shut down rumours it had been triggered by regulatory pressure, despite it being “a huge burden”, including quarterly reports and extensive due diligence.
“We were totally in compliance. It was more of an operational burden…It is really the right business model for everyone involved,” he said. “Issuers always saw us charging investors as us charging them because it meant they weren’t going to buy as many shares as they would otherwise…It is much easier to run this as a services business.”
He also shared the firm’s intentions to acquire a broker-dealer license, for which they are already in talks with the relevant bodies.
Richard Johnson, market structure specialist at Greenwich Associates, says the STO wave is a natural, more compliant extension of the ICO boom and explains the role of technology platforms like CoinList.
“These companies set up around the ICO framework. They moved quickly into regulated security tokens,” he said.
“[Startups] are paying for a technology platform. It is just another technology. There will be some issuers who have a strong community [of investors]…The fundamental service is going to be bringing investors to the issuers.”
Editors note: This piece was corrected to make clear CoinList raised in venture funding