What is STO? Will STO replace ICO ?

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What is STO? Will STO replace ICO ?

Postby thetvbytesoft » Wed Dec 05, 2018 6:23 pm

ICO is a form of fundraising that brings great opportunities to small companies. However, due to the lack of official regulations, ICO has not been accepted by many countries. And that’s when STO comes in as an alternative.


What is STO?

STO (Security Token Offerings) is a fully legally-mandated fundraising process where the issuers sells programmed shares to investors.
STO is a fully adjusted ICO, which is carried out under the control of SEC. They are divided into various categories namely Reg D (for institutional investors only), Reg S (for STOs held outside the United States) and Reg A + (allowing the participant of retailers).
STO paves the way for blockchain companies to find and combine common points between two financial worlds. They will integrate the most useful blockchain utilities in centralized trading platforms like Nasdaq. This allows investors to engage in broader investment rather than just cryptocurrency.

Notices on joining an STO
Darren Marble, CrowdfundX CEO, a fintech with of standard Reg A + IPO and ICO (especially KodakCoin), gives some advice on this topic.

1. Searching for a legal consultancy agency
Before joining an STO, blockchain companies need to find a qualified securities lawyer. It's best to understand both stock and crypto, according to Marble. One of the biggest requirements is that it must be filed to SEC. It will take about 60 days to complete the paperwork and another 60 to 75 days to get the certificate of SEC.

2. Proper process
Compared to ICO, launching an STO is a much more complicated process. However, the results will be worth the efforts, and this also forces companies to take more responsibility for their projects.

3. Find a guarantor
Once everything is ready, you need to get a guarantee. In fact, project owners couldn’t have obtained that much money without a guarantor. Marble also shares that unauthorised issuers in the United States may be fined, suspended, or forced to cancel the transactions. And in the worst case when the issuers deliberately violate federal securities laws, they may face prison sentences.
In short, STO is a "legalized" version of ICO. Many economists who are worried about the risk of ICO insecurity consider STO the future for blockchain companies. Although the procedure will be much more complicated, the assurance of responsibility and interests of both sides makes STO worth considering.

See also: Blockchain Programing
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