2018 is the year of Security Token Offerings, otherwise known as STOs. After the whole Bitcoin and ICO craze of 2017, the world of cryptocurrency underwent the beginning of an evolution towards offering more security and less risk through the development of STOs. Security tokens are like digital representations of on-paper securities, such as stocks, bonds, and real estate assets.
Processing through the blockchain rather than the incumbent monolithic rent seeking DTCC, immediately delivers value as security tokens eliminate middlemen and create economic and settlement efficiencies, making them available to a wider group of people. The great thing is STOs are required to follow Federal securities regulations including oversight by the SEC. Unlike some of the issuances during the 2016-17 ICO craze, STO issuance offers a security interest in a quantifiable asset or revenue stream of the issuer.
Security Tokens Offer The World
Additionally, STOs allow smaller companies greater access to foreign investors, widening their investment opportunities and creating a global pool of investors. Companies represented by properly licensed Investment Banks can reach buyers and sellers across the world, no matter the language, time zone. Further, the emergence of STOs adds another layer to protect investors.
Security Token Offerings Benefits For All
Company owners don’t have to sell great amounts of their company during STO transactions. While equity is often part of the sale, the issuer does not have to include voting rights. Packages can, however, include other creative benefits for customers such as discounts, extra services, and other perks for proof of stake models.
Companies are not the only ones who can take advantage of security token offerings. If you are an owner of a valuable piece of art or real estate, it can be difficult to find a buyer. Instead, you can divide the value into tokens that you then sell to dozens of investors.
Security token offerings are a more secure form of cryptocurrency. Between Federal regulations and the empirical proof of ownership deliver by tokenizing of assets, investors are significantly lowering their risks on possible scams. Still, anyone dabbling in cryptocurrency needs to be careful, even with STOs. The regulations are in a state of flux and the market is still developing. With the emergence of a more focused set of regulations around Blockchain issuance of digital assets and institutional participation, it seems the full benefits of STOs will play out over time.
If you want to learn more about Crypto Currency and Blockchain, tune in weekly to “What’s the Deal” on Newsmax TV to hear what the world’s most renowned Crypt and Blockchain experts have to say about this new emerging asset class.