Security Token Offering (STO) is being presented as the future of corporate finance and comes with force to displace ICOs. The financial world believes that the distribution of shares through tokens gives many advantages as it provides better distribution, liquidity, control and relations with investors.
With these improvements can be made better KYC / AML processes, trade adjustments adjustable to the needs of the company and better monitoring of shareholders. This last point is one of the most interesting because it allows to get a better understanding of the investor and what he really wants.
STO against ICO
No one can deny the economic success that the ICOs have had in recent years, being a method of collection so young has managed to raise huge amounts of money. However, the criticisms of this collection method are already being voiced and that is why many are preferring other tools.
The problem with ICOS is with their investors. People who invest in ICOS often feel that they are not getting anything in return for their money, which is because ICOS have only remained utility tokens and do not give traditional rights such as the right to vote, dividends on company profits and liquidation.
In this scenario the STOS appear to unite the security market with the Blockchain market. This union could even be beneficial for the entire Blockchain market since it would take this market to still unknown sectors.
With the STO the investors obtain the classic rights of the stock market but in a more transparent and safe way as well as they receive profits that are typical of the tokens that are sold in the ICO.
Way to go
The STOs have yet to resolve a few stumbling blocks before they reach the top. The first is compliance with KYC/AML policies. If the STOs want to make their money collection processes adherent to what the financial authorities demand then they must apply strict controls on the identification of their investors.
However, companies are already working to solve this problem. They are looking to develop a registry software that allows the tracking of the holders of the security tokens in the Blockchain network of Ethereum and also provide additional features such as the management of shareholders’ rights, control of the company’s royalties and other elements.
What will come in the future?
Security tokens are demonstrating that they have the potential to break into the market and attract large investment funds. It can also be very beneficial for Blockchain technology, which means that we have to be very attentive to what they can develop from now on.