Despite the bearish landscape of the real economy, cryptocurrencies continue to soar to new heights each day. The Bitcoin and cryptocurrency market has found stability in tandem with its growing branches in almost every sector. Everybody, from traders, marketers, investors, government agencies to the financial experts talk about it and take a keen interest. And why not! They help you make fortune without much effort.
Alongside the digital currency phrases, a security token offering (STO) is heard quite often. Security tokens, financial securities’ digital versions have become the latest buzzword in the world of crypto. The cryptoians see security tokens as a development that could regenerate the crypto sphere.
In this blog, we are going to jot down a brief on what is STO and how is the STO industry right now compared with 2018 and 2019. Let’s get started.
STO is a process similar to an ICO (Initial Coin Offerings) where an investor/merchant is issued a crypto coin or token in exchange for money representing their investment. In short, a security token displays the information of the ownership of the investment product that is recorded on a blockchain and issued as a token.
In contrast to the traditional financial system, STOs cover users with investment smart contracts and make sure that every party abide by their obligations.
Securities include financial instruments i.e.
- Real estate
- Bonds
- Private equity
- Venture capital (VC)
- Stocks
- Shares
- Revenue participation notes
These financial instruments hold monetary value as they are tokenized and put up with a security token offering.
Unlike ICOs, STOs distribute tokens that offer securities. Also, security tokens can not be traded on regular token exchanges. Exchanges need to fully abide by regulations including extensive investigations, token listings, data sharing and investor onboarding procedures. That is why these tokens are traded on specialized exchanges that support STO Platform Development.
Given below are the four key ingredients of STO:
- An issuance platform – These platforms make the issuance and distribution process easier.
- A blockchain protocol – Some of the issuance platforms, such as Polymath, have their own blockchains whereas some still use Ethereum. The Ethereum solution is a widely used one.
- A smart contract – Smart contract is a programming language for the blockchain protocol that lays down the rules for the issued token.
STOs were created to bring the institutional investors on board during the cryptocurrency and blockchain era. We are the leading sto development company providing the A to Z security token offering services. Our list of security token services include:
- Security token development based on equity, asset reserve or debt token
- Fundraising across Asia
- Formation and incorporation of required entity structure for security token issuer
- A complete audit of STO website, owner’s manual and marketing materials
- Financial model development for the project and much more.
