What is an STO?
STO is an acronym for Security Token Offering. This is a process similar to that of an ICO where an investor exchanges money for coins or tokens representing his investment. However, unlike ICOs, the STO goes even further and distributes tokens that have the status of securities as financial securities. They are linked to an underlying investment asset such as stocks, bonds, real estate funds or other funds.
STOs, therefore, distribute securities. These are tokens that are negotiable, fungible, and monetary instruments, as part of a property or company.
What are the benefits of Security Token Offering or STO Token Listing?
During the 2017-2018 ICO Folly, many token issuers sold investors a lot of tokens with no value and/or non-compliance with existing securities laws.
STOs are expected to be an alternative option that complies with ordinary token sales regulations. They aim to correct perceived inequities on the part of investors, such as granting Security Tokens holders dividend rights or other predefined revenue sources.
STO tokens also benefit issuers and are generally clear obligations to stakeholders with respect to the distribution of tokens, the issuance process, and secondary transactions.
Other advantages of STOs
- Credibility. In the world of ICO, it's chaos, to say the least. Many people have been scammed, even more, projects have not yielded the expected results and most investors remain stuck with unnecessary chips. On the other hand, STOs comply with all regulations and restore some credibility.
- Improves traditional finance. While traditional securities are slow and expensive because of their old infrastructure and their intermediary multiples, Security Tokens facilitate services at a lower cost.
- Programmability. Security Tokens can be programmed and used by smart contracts.
- Free market. Borders and local regulations are not limits for Security Tokens.
- Many investors. Traditional securities agreements involve only local individuals, while Security Tokens are open to all Internet users.
- Reduction of institutional manipulation. A free and open market with fewer mediators should reduce market manipulation, at least in theory.
- More liquidity. Security Tokens will be traded on specialized exchanges so that investors have a convenient way to liquidate their assets.
More importantly, Security Tokens and STOs allow businesses to create a new set of stakeholders with new permutations of debt, equity, or contributor roles. They correct fundamental defects in Utility Token sales and can improve traditional financial securities.
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