Many people are now familiar with the utility tokens but provide the security token offering a completely new concept there. Unlike the utility tokens, which are often used to access a service provider, security tokens are property-defined assets. This feature provides much higher price stability for the STO investor compared to utility tokens. The holders of these securities have various rights, including profit-sharing rights, dividends, equity, repurchase rights, and voting rights.
Nevertheless, many start-ups tend to do so, initially offering deals to avoid classifying their tokens as securities. The complex regulatory conditions associated with the issuing process and the high costs are the main reasons for the unpopularity of the STOs.
There has been much hype surrounding the new security token offering, especially as the SEC has almost completely stifled the use of utility tokens as unregistered securities. Furthermore, STOs are very similar to an IPO because of the comparable legal framework – the advantage being the higher reliability and security that investors get for their investment.
A large amount of ICOs that have failed in the last 2 years has undermined the trustworthiness of Blockchain projects. Fortunately, the security token offering has already come to the rescue. In the following article, you will learn how to successfully implement your own STO.