What is STO Security Token Offering? ICO Vs STO

What Is Security Token Offering (STO)?

STO is basically created to fund safety and fundraising for a new project. It stands for security token offering. The concept comes behind the Initial Coin Offering ICOs. The concept comes from PolyMatch. In the past year, 2017 ICO raise more than 5.6 billion. In general, to raise funds through initial coin offering they offered to buy their tokens. Those cryptocurrency tokens can exchange with ETH or BTC. You can imagine this token with a share.

For example, when you gain a share from any company, where the company has been regulated by the government. Generally, they are registered and have rights and responsibilities. This share gives you rights to the company like voting power also you get the company profits. So these Initial Coin Offering tokens give you access to that network platform and services.

The security token offering is just like the initial coin offering. As usual like ICO you can participate in the STO and you can buy tokens during the security token offering. So you can sell, buy and trade on the exchanges. However, since this STO and obviously, your token have a strong background as a real asset. For an instant, this token is like tangible asset, you are a company shareholder and get revenue every time.

Security Token Offerings on the Polymath Platform

When an organization finished a Security Token Offering on the polymath platform they assert you with some requirements. It’s gone through Security Token Offering and a technical procedure before issuance. This token is ready completely with full KYC/ AML requirements. Also security laws and from any part of the world.

This new concept STO token creates by Polymath’s ST-20 standard to protect any type of undesired trader person through robust smart contracts. It is stile SEC chairman, Jay Clayton, stated that all ICO projects should be securities. Polymath platform gives opportunistic and insurance in an automated way.

Security Token Offering Basic Needs

Initially, you need to ensure about the token is under security. A little matter you should remember before considering it as a security token. Security exchange commission (SEO) regulated by the SEC and the government allows raising funds in a legal way.

Many cryptocurrency enthusiasts think SEO is the big thing. It is the future. The security token also makes a reasonable profit. SEO gives the right advantage of the network of voting.

Token Sale SEC Securities Laws

First, in your mind comes a question about what makes token security. In the USA one of the intentions is to invest in the security system. The centennial case indicated Security and Exchanges Commission v. Howey Co., 328 U.S. 293 (1946). Here are 4 things.

SEC Securities Laws
SEC Securities Laws
  1. Investment type money or assert.
  2. Is it a common enterprise investment?
  3. The expectation of investment profit.
  4. Profit arises from the third parties’ efforts.

Is The Token a Payment Instrument?

The definition of “security” is wide-ranging. underneath Section 2(a)(36) of the 1940 Act, security suggests that, unless reported otherwise, “any note, stock, stock, security future, bond, debenture, proof of obligation, certificate of interest . . .“ the total definition will be found on-line. The 1933 and 1934’s act’s definition of security is actually identical. basically, associate e-money or payment services will be thought of as security.

Does an Exemption Apply?

Even if the token falls below the definition of security, there could also be AN exemption that applies. The exemption permits investors to issue the token, while not being referred to as a security, and as a result, it wouldn’t be necessary to own a prospectus. the most effective thanks to confirm whether or not one’s token could be a security or if AN exemption applies is to talk to securities skilled.

What are the differences between ICOs and STOs?

There have many differences, but most of the cases are similar. However, before finding differences between STOs and ICOs you need to know about them. Basically, you need to understand ICO properly. A lot of ICO projects are coming into the markets. ICO offers tokens to raise money for a different project. This procedure organizes by blockchain or most cases ERC20 digital token. Unluckily, it is widely unregulated and investor has a chance to risk fund. Security Token Offering

There is a big chance to get scams on ICO projects. Many ICO project offers their token opportunities, but in the end, they just scam. Honestly, it just happened-end to the lack of regulatory guidance. That’s why it needs regulation by a strong back-end. So, STO is different because it is regulated.


  • Initial coin offering project purpose to raise funds. It is risky for unregulated. STO is pretty similar to ICOs.
  • STO reduces scam risk. ICO has a chance for scamming.
  • Security token raises money as an assert backed up. It lacks an ICO.
  • Luck of rights. On the other hand, you will get voting power.
  • STO is much more transparent for both individuals and companies.
  • It needs financial authorization and KYC but in ICO it is not mandatory.
  • Major digital exchanges do not support STO. Most of the exchanges are supported.

Crowdfunding And Regulation-Friendly Blockchain

STO backbone and registration by the Securities and Exchange Commission (SEC). Also, get benefited as Reg A+ and it is one kind of company share. Every STO project has a read assert project. For example, a real-estate psychical project. You can contribute as a company shareholder. You also have voting access. What is Security Token Offering? Tokenization allows fractional ownership, enabling investors to trade their Security Token Offering on secondary markets.

STO gives the investor a security layer for their investment. It is one kind of Initial Public Offers (IPOs). It makes good sense to investors. STO has transparency that pulls up the new investor in the cryptocurrency market.

Many crypto experts comment about STO and they are very excited. They are expected $10 trillion crypto market by 2020.

The concept comes from a blockchain startup called Polymath headed by Trevor Koverko. STO gives extra power to the crypto sphere. Because currency trending is crypto regulation.

What is STO?

STO stands for Security Token Offering, which refers to a fundraising method conducted on the blockchain using security tokens. Unlike Initial Coin Offerings (ICOs), which primarily involved the sale of utility tokens, STOs involve the issuance and sale of security tokens that represent ownership or investment in an underlying asset. These tokens comply with securities regulations, providing investors with legal rights and protections.

STOs differ from traditional fundraising methods by leveraging blockchain technology and smart contracts, which automate various aspects of the offering process. This digitized approach ensures increased transparency, reduced costs, and improved accessibility for both issuers and investors.

How does STO work?

The process of conducting an STO typically involves several key steps. Firstly, the issuer identifies the underlying asset, which can include real estate, company shares, or other valuable assets. Next, they tokenize the asset by creating digital tokens that represent ownership. These security tokens are then offered to investors through a regulated platform, complying with legal requirements such as Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.

Investors interested in participating in the STO can purchase security tokens using cryptocurrencies or fiat currencies, depending on the platform’s specifications. Once the fundraising period concludes, the tokens are distributed to the investors, granting them ownership rights or a share of the asset’s profits.

Benefits of STO

STOs offer various advantages over ICOs and traditional fundraising methods, making them an appealing option for issuers and investors alike.

One significant benefit is enhanced investor protection. Security Token Offerings are subject to securities regulations, ensuring compliance and providing investors with legal rights. This increased transparency and accountability foster trust between issuers and investors, reducing the risk of fraud or scams.

Furthermore, STOs facilitate increased liquidity. Tokenization allows fractional ownership, enabling investors to trade their Security Token Offering on secondary markets. This liquidity provides investors with more flexibility, as they can exit their investments or diversify their portfolios more easily compared to traditional investments.

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