Security Token Offering or STO varies from the tokens offered in ICO (Initial Coin Offering) which can be understood by its very name. The face that STOs are actually secured with actual assets, profits, or revenue of the company. It also entitles the token holders to have legal rights over revenue distribution or voting. Technically, the properties of this particular token are quite different from the regular tokens.
But there are certain attributes that make it different from its regular counterpart. The first thing is that provides a quantum of ownership to the holders, unlike many other cryptocurrencies and altcoins, STOs are considered securities by the federal laws. They are created over the blockchain which means they also have smart contracts integrated into their structure and they can be transacted without any intermediary.
Table of Contents
How are they legally recognized?
Bitcoin has been recognized as a commodity by the IRS (Internal Revenue Service) and CFTC (Commodity Futures Trading Commission). The Securities and Exchange Commission even recognized ICOs as securities, however, those currencies were not licensed as a regulated entities.
All the financial instruments that deal in financial assets such as bonds, commodities, stocks, derivatives, and bank deposits have to be compliant with consumer protection laws.
The Benefits
The compliance factor of STO also makes it easy for issuance as they are backed by Regulation Crowdfunding, Regulation S, D, and A+. As a result, they also become cheaper to buy as compared to tokens offered under ICO.
The other advantages which are exclusive for holders are its capability of generating dividends, profits, voting rights, and sharing of ownership in the company.
Cheaper
Unlike the other financial instruments, security tokens are not levied with additional charges for buying and selling. It enables the holders to earn a significant amount of returns on investments.
Faster Payment
One of the many benefits of using this token is the speed as well. The integrated automation and KYC regulations make the whole process of making the payments using STOs faster than that of its counterparts.
Global Acceptance
Backed by financial assets, these tokens are accepted by a large number of exchanges and institutions across the globe. They give you an ease of trading anywhere in the world, you can exchange them practically everywhere. It will also help you boost your liquidity levels with its enhanced acceptance.
All these features make STOs a much-preferred option over the regular tokens which has also boosted Security Token Offering Services. You can easily hire a security token developer as there are many companies giving these services now. However, you need to make a shrewd choice when it comes to assigning this task. Technoloader is a company that offers premium services for STO development, contact us today to empower your project with this technology.
