This is my entry for the sponsored writing contest organized by @monajam. You can find the contest here.

It wouldn’t be an overstatement if it is said that Initial Coin Offerings (ICO’s) have completely transformed the concepts of fundraising for early stage blockchain companies all around the globe. A whooping sum of up to $4 billion has been raised by such events in the past years.

Although this is indeed a great leap in blockchain venture capitals, the lack of adequate regulation has led to scams and other devious practices to emerge. This caused the Securities & Exchange Commission (SEC) to intensify its scrutiny of ICO’s to ensure they are fully in compliance with federal security laws. The recent number of ICO's and the huge amount of money being generated at great speed caused venture capital firms to raise distress calls towards governmental bodies.

What is a token?

Blockchain has become the widely known technology of few years back up till date and it has shown numerous inherent innovations, such as a trust-less network or decentralized system, but what really aids all these is the use of tokens.

Tokens are very useful innovational pieces because of their ability to allow organizations run and businesses re-create new models. Generally, they are usually classified as either utility or security tokens. Examples of these are Filecoin or Younow,XAP, Dodgecoins,etc

Difference between security and utility tokens

Utility tokens, which can also be referred to as app coins, represents future access to services or products that a company possesses or grants. What defines them peculiarly is that they are not designed as investments. They are service units that can be purchased

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Security tokens are a bit more complicated; this because they are considered to be similar to an investment contract. Future profits or revenue sharing are basis for its applications amongst a host of other considerations. An example of a security token is Polymath.

Problems faced by businesses fundraising by issuing securities

Well for you to be able to issue a security token, then you have to be in compliance with SEC rules and regulations; even if it is unfavorable to your business. You just have to go along with their laws, which many businesses might see as unfair

Also, security tokens have limited liquidity options for investors. They (investors) do not have the same liquidity options compared to other crypto-assets. There is the absence of existing exchanges to trade security tokens and to offer trading of assets and exchanges must meet strict know-your-customer (KYC) standards as specified by SEC. Next is that current securities laws are not easily adapted and may pose additional complications as well security tokens facing challenges much more than utility tokens owing to the additional security requirements that come into play. Flexibility is greatly needed to allow for changes in terms of the security which may be difficult after its issuance.

Introducing Mobu

Mobu is an end-to-end solution for launching security tokens. Mobu is an ecosystem that implements a unique MOB20 standard protocol to ensure the protection of both its investors and ICO issuers to create a more enthralling and competitive ICO service pricing environment in line with Sec and all its guiding regulations, KYC/AML inclusive.

Mobu offers a decentralized and organised ICO platform to facilitate the release of compliant security tokens on the blockchain.. Real businesses who wish to raise capital by issuing security tokens can develop their ICOs on the Mobu platform. Mobu creates an abstract smart contract from which all security token ICOs are extended. The Mobu abstract smart contract will contain the code that is required by the security token ICOs to conform to the Mobu ERC20 platform and the MOB20 standard to adapt to the ideas and requirements of Mobu.

A regulatory yet friendly token presents the only way for institutional money to enter the blockchain and a user-friendly platform for trusted ICO's is the only way to allow non-tech businessmen participate in the blockchain ecosystem. Mobu introduces a new innovative method of escrow services to ICO's. Investors are able to leave the ICO after the crowdsale on a pro-rata basis if the ICO issuers do not stick to their roadmap or attain their goals. A “lockup” utility to Mobu tokens for service providers will be introduced to access services, rather than spend the tokens. This creates scarcity of supply in the market and increases the demand and intrinsic value of the Mobu token.

These unique features ensure higher overall ROI for investors and creates a network of confidence and trust that will boost economic efficiency and incentivize community growth.

The Mobu Token

Closing Remarks

Mobu shows to us a high level of innovation and futuristic point of view by developing a system that meets the needs of its users in a fully functional manner and boost economic and operational efficiency by creating a network of confidence and trust by bringing to them, securities in a new decentralized and secondary market with negligible fees and instant settlement time.

For more information, watch this youtube video explaining all about Mobu

References

• Icosbull
• 247wallst