Security Token Offering(STO): A Precision to ICO

security token

Securities are assets that have an expectation of growth in value over time. They include real-estate, stocks, company equity, collectables and more. These are different from the utility tokens and are used for the operation of Blockchain network but not for investment.Today, most blockchain-based tokens are supposedly utility tokens. This is how they’re currently able to circumvent most SEC regulations and raise millions of dollars through ICOs.The SEC(Security and Exchange Commission) recently said they consider nearly all existing
tokens to be security, not utility tokens. This means many existing tokens will need to either shut down or restructure. Security token offering are another name for ICO, Initial Coin Offering. Also the ICOs have to structure their tokens as security tokens rather than utility tokens.
In order to offer a security, an issuer will have to perform KYC and AML checks to adhere to SEC regulations. But these days the tokens are traded freely among people. So, they are termed as utility tokens because if it will be considered as security tokens it will be illegal without the KYC and AML formalities. Anything that possesses legal measures is definitely beneficial. So, let us have a look at some of its advantages:


An American entrepreneur and US Army veteran, wrote in his article, arguing the case that security tokens could become mandate by the government.
“It will be difficult for regulators to ignore the benefits of tokenized securities once the technology & impact is better understood. The idea of regulation becoming proactive, while also increasing compliance and data accuracy/transparency, is quite compelling. Not to mention, the hundreds of millions of dollars and thousands of man hours that can be saved.”
Seeing all the advantages of the security tokens it should definitely be made mandate as it holds a bright future ahead.


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