Author: Daniel Taylor, Head of Policy at Zumo.
The Crypto X community believes tokens are dead. The reasons are both correct and completely wrong.
The current state of the crypto token market is clear: a chart comparing Bitcoin (BTC) to other tokens. Bitcoin holders are jubilant, while token holders are suffering significant losses.
When Bitcoin falls to just 11.6% of the portfolio, the failure stories of tokens and the opportunities for recovery emerge.
Reasons for token failure.
The known failure factors of tokens: internal centralization, large projects often reserved for teams and private placements, with little public sharing.
It is considered 'normal' for most tokens to depreciate by 95% after going public, which is unacceptable.
Many investors misunderstand utility and governance tokens, viewing them as passive appreciation tools. In fact, active protocol participation—such as staking or providing liquidity—is necessary to generate value sharing.
Investors are limited to the crypto token market and cannot broadly and legally access tokenized forms of physical assets.
The revival of tokens.
But structural flaws are being addressed. Take the EU’s MiCA as an example, which demonstrates the potential for regulation-driven innovation.
With appropriate disclosure, EU investors can participate in token public offerings within a regulated framework, bringing new fundraising projects.
Clear regulations are gradually bringing higher quality assets. Whether it is 'unsecured' crypto assets or more security-like tokens, concepts such as asset trading authorization and market abuse control are applicable.
Necessary adaptations are a good thing in the long run; strict disclosures will reveal inappropriate designs in the token economy.
In the future, investors will be able to invest in a range of tokenized physical assets, rather than being limited to crypto tokens; law, not technology, is key.
Tokens endure.
The cumulative effects of these dynamics are profound. Previously restricted investment channels will be replaced by broader public fundraising, a solid structural investment framework is forming, and various types of tokenized investments will emerge.
The future is a tokenized capital market where global investors can benefit directly through decentralized applications.
Innovation and reshaping are needed, but tokens will not disappear.
Author: Daniel Taylor, Head of Policy at Zumo.
This article is for general informational purposes only and does not constitute legal or investment advice. It represents the author's views and does not reflect the stance of Cointelegraph.
