What is an STO?
Security Token Offerings (STOs) are a form of raising capital that involves the issuance and sale of digital tokens which represent financial securities. These tokens are typically issued on top of blockchain networks such as Ethereum, allowing for fractional ownership in traditional assets like real estate, art or private equity. Unlike Initial Coin Offerings (ICOs), Security Token Offerings must comply with regulatory frameworks put in place by various governing bodies including the Securities and Exchange Commission (SEC). This means that all investors participating in the offering must be accredited and verified before they can take part.
STOs provide several advantages to both issuers and investors:
– Issuers can raise money from a larger pool of potential investors without having to deal with high costs associated with managing traditional IPOs;
– Investors have access to more enticing asset classes than those traditionally available through regular stock exchanges;
– The use of smart contracts on blockchain networks allows for faster settlement times, improved accuracy and increased security compared to existing systems;
– By incorporating regulations into their underlying code, STO tokens are compliant right out-of-the-box.
