Security Token Offerings (STO) appears to be taking over what Initial Coin Offerings (ICO) are doing for 2019. Security based tokens have emerged as the future in crypto-currencies, and they could become so popular that they will completely overtake ICO’s in a potential market worth multi-trillion dollars.
Due to the fact that ICO’s have been hit with a lot of regulations recently, STO’s could act as worthy replacements in the next decade.
Here is everything you need to know about STO’s and how they could be the future for the next few years.
1. Intrinsic Value
Firstly, Security Token Offerings hold a potential safer ground to invest instead of ICO’s due to the fact that, investors receive stakes with each STO in a company and its assets.
Security tokens offer the investor the ability to invest in a company through equity of position, profit sharing, dividends, voting rights, and numerous other benefits that surpass those of ICO’s.
ICO’s offer future investor access, while with security tokens, the investment takes place now.
STO’s represent a legal right to the ownership of the company in question and its assets. STO’s offer investors potentially more than ICO’s, and at a lower risk. One of the highest grossing STO sales, tZERO, managed to raise $134 million and 10% of the company’s profit goes to investors and token holders.
2. Transparency
Anyone who’s invested in an STO will have full information on a daily bases regarding the goals and tokens are given, promised, and encumbered.
The main talking point of investing in an STO is divided into three criteria:
- Healthy capital formation
- Ensuring their investors and protecting them from any potential fraudulent activities
- Ensure and maintaining fairness and compliance controls
STO’s by nature will provide a fully transparent framework and will strive to accomplish the talking points mentioned above.
3. Regulatory Compliance
ICO’s have been popular since early 2017, and they have dominated the talking headlines for quite some time. STO’s are fully compliant with all the regulatory requirements and are much safer for investors than ICO’s, with more transparency, and a more enhanced level of indemnity for all parties involved in the process.
ICO’s, on the other hand, are not so much. Because of the narrative placed by the regulative bodies such as the United States Securities and Exchange Commission (SEC), which view many ICO’s as a token of security, the classification is simply not true because a lot of ICO’s have trouble fulfilling this requirement.
The SEC has been notorious for taking legal actions against ICO’s because of their claims to a “securities token.” And STO’s simply don’t face problems like these, because they register their coins from the start as tokens of securities.
4. Recovery Feature
Virtually any investor is aware of the risk of losing access to their wallet or the absence of funds in their wallets. STO’s who are carefully constructed, have the ability to reissue tokens to shareholders, however, they are very careful about how they do it.
It’s not as easy as it sounds, and they go through a lot of checks, balances, and confirmations before the lost tokens can be reissued. The STO model is fully compliant with all regulations, and STO platforms like Token IQ serve as the solution for the legal transfer of ownership. They serve as a platform that will act as a fails safe for token holds, if the company in question cannot issue any tokens to a specific wallet.
