Security Token Offering GMT Legal

Security Token Offering (STO)

Security Token Offering (STO)

According to Nasdaq analytics, security token offerings will be set on the central stage in 2019. Moreover, STOs are projected to have a market cap of $10 trillion in 2020. But what is an STO?

Security Tokens and STOs will allow any company to offer equity, debt or dividends in the form of tokens. A project does not need to have substantial assets to attract investors — since any asset can be tokenized, offered and sold, and any asset can serve as a guaranty itself.

Key advantages

Main advantages of tokenization are fractionalization of more considerable assets, an increase of liquidity, lower intermediary fees and better market efficiency. However, the most significant benefit that security tokens provide an issuer is access to a global pool of capital. As these tokens can be sold and traded internationally (when compliant with regulations), they become more reasonably priced and, therefore, attractive to investors.

Attractive to large investors

STO offers more security for promising, solvent investors, who are not looking for risky projects. STO as an SEC compliant offering is appealing to both institutional investors for it’s more recognizable structure, and to crypto investors for its technological innovation.

Minimizes non-compliance risks

Governments have never been particularly friendly towards ordinary ICO. Now states are becoming more persistent in keeping an eye on ‘ageing’ ICO funding. STO, on the contrary, offers clear compliance techniques, well-treated by most jurisdictions worldwide.

Satisfies new-age investors’ demands

More and more investors are no longer satisfied with what ordinary ICO offers them in return for their funds. STO possibilities, such as voting for project’s decisions, dividends, etc., have endless perspectives for satisfying this increasing investors’ demand.

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Published by GMT Legal

GMT Legal
GMT Legal is an International law firm providing services in crypto and blockchain industry.