STO (Security token offering) is the same ICO, only for security tokens. Security tokens are crypto-assets that are tied to real securities and stocks, in other words, virtually "tokenized" assets. It happens that this type of token is tied to real capital and can play the role of a digital co-owner share.
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Security token as a tool for STO
The security token was created to share ownership of real items: from company shares to real estate. Each owner of this type of token has several rights to the assets to which the coin is attached. Security coin is necessarily attached to a smart-contract and is governed by regulatory laws.
Depending on the conditions of the smart-contract, the owners of the coin may have a list of rights, for example: regular dividend payments, the right to vote as a co-owner, financial receipts to the account, etc.
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STO and the Law
STO, Security token offering is often an effective search for investors to implement new projects on an existing technical base. In such cases, real assets are transferred to tokens and fixed in terms of a smart-contract. That is, each of STO investors will have real ownership of assets.
The release of Security tokens requires serious oversight from regulatory authorities. Additional regulatory systems for regulating security tokens may include: tax reporting, monitoring compliance with established requirements, additional information transparency, interest payments, the presence of token owners at meetings.
Today, Security token offering is used for the development of new large-scale projects or in case of major changes in the activities of large companies. The use of STO for work with real estate is also actively developing.
In case of violation of agreements on a smart-contract, any of the parties may be brought to justice in court. STO gives all participants guarantees of compliance with the conditions at the legislative level.
Editor: Yuliya Soroka