Gone are the days when entrepreneurs were reaching out to banks and other sources to raise their funds. In specific, when it comes to blockchain projects, IPO and ICO were a couple of strategies that were dominating. But recently, Security Token Offering has emerged in the line.
WHAT ARE SECURITY TOKEN OFFERINGS (STOS)?
Security Token Offerings are the fundraising strategies similar to Initial Coin Offerings. Investors are issued with security tokens instead of utility tokens. Security Tokens are tradable real assets that hold real value.
In the past two years, STO’s have managed to raise a great number of funds. The popular ICO Stats provider, ICORating has stated that STO’s have raised $700M by February 2019. Once the STO’s are accepted worldwide, potential investors will start with this strategy.
STOs are seen as more stable and legitimate than ICOs, as they can provide investors reassurance from the get-go that they won’t run into problems down the line.
STO issuers have several available securities exemptions at their disposal… Each has its pros and cons, and it’s important for issuers to understand the differences between each exemption. Since most blockchain companies are not experts in this field, they’ll need a little help.
HOW TO EMBARK ON AN STO
- Seek Legal Advice
Any blockchain company looking to embark on an STO should first seek the services of a qualified securities attorney. “Preferably one that straddles both traditional markets and crypto,” Marble advises. One of the biggest requirements is that a Form 1-A must be filed with the SEC. This is a process that takes 60 days to complete, plus another 60 to 75 days to be qualified by the SEC.
- Get Your Books in Order
Embarking on an STO is significantly harder than creating an ICO, giving it even more weight and likelihood that the project behind it is solid. To get started, a company needs to have their books in order. A Reg A+, for example, requires two years of audited financials.
- Find an Underwriter
Once your paperwork is up to speed, you need to get an underwriter. Many startup hopefuls think a coin or token will help raise all the capital needed to hit the ground running. Reality check: you’re not going to raise $10 million for a highly technical blockchain company without the help of an underwriter or investment bank.
Issuers that sell unregistered securities in the US may be subject to fines, suspensions, or be forced to conduct a rescission offer, which means rescind a transaction in which a securities violation occurred (not fun). In a worst-case scenario, issuers who knowingly violate federal securities may face jail time.
Therefore, if you are planning to launch STO, you can get in touch with us!
Here are a few features of our STO Dashboard Script/ Software:
- Real-Time Statistics
This displays the real-time stats and the user can get to know the prices and latest happening.
- Multiple Crypto & Fiat Currencies
Our Readymade STO Dashboard Script can help you with trading multiple cryptocurrencies instantly.
- Two Factor Authentication
This security factor enables the user to get an OTP, enter it and perform the transactions.
If you need more information on developing STO Software, feel free to contact us right away!
If you are planning to launch Security Token Offering, you can click here to know more!