Security Token Offerings (STOs) Explained
A security token offering is defined as any blockchain-centric representation of an asset. By a process known as tokenization, a security token offering divides a very expensive or complex property into equitable pieces, giving companies wider access to funds and enabling investors to easily enter into the market.
For investors, security token offerings present a substantial advantage over ICOs in regards to the compliance standards for legal regulation. Because STOs are regulated by the SEC, they are viewed as more transparent than an ICO. An STO is actually more similar to a traditional IPO than an ICO, primarily because the token is backed by collateral. This collateralization protects investors in the event of bankruptcy or fraud.
While ICOs are subject to less regulatory oversight, the practical differences between ICOs and STOs are marginal in a real-world setting. At IBC Legal Group, our experienced STO attorneys will work with you to determine which strategy you should use for your particular offering.