When cryptocurrency was introduced many people doubted its authenticity. Evidently, with its help, many scams were also carried out and that’s the reason people don’t trust ICOs completely. To debunk this myth and to provide the same efficiency of blockchain, Security Token Offering has been propounded. Technically, it is the same token which you get in an ICO, but it is secured with a financial asset which makes it much more reliable for investors.
Deciphering Security Tokens
There are various advantages of using a security token, it is much more cost-effective with zero administrative costs and able generate significant amount of returns. As far as speed is concerned, security tokens do a fantastic job and help in maintaining liquidity as well. The integration of Know Your Customer regulations and AML check also make the transactions more secure. It comes also makes way for many other possibilities with all these inclusions.
The biggest advantage of using a security token is that it comes with a certain quantum of ownership to the investors which makes it fundamentally different from regular tokens offered under an ICO campaign. As they are created on blockchain, you get the same sense of security which gets emboldened with smart contracts. These features help the investors get voting rights and also gets them a considerable share in revenue distribution.
Legal implications & their compliance
As it involves financial assets, the compliance to regulations is essential and it has been made clear by many regulatory bodies. It starts with the very first procedure that is registration, for launching a security token, you need to register it with SEC (Securities and Exchange Commission). This means there is no chance of planning mischief in order to dupe your investors which has been done in past.
There is also a provision of the JOBS Act which seems to take the benefits issuers and holders to a whole new level. The issuers can can apply for three specific exemptions which are Reg CF, Reg @, Reg A+ and Reg D. All these regulations have different implications and provide For example, Reg S is applicable only the offerings that are launched by firms outside the US. Under the section 5 of 1993 act, they can register the STO under their country’s legal specifications.
How to get STO for your project?
Due to all these regulations and attributes, security tokens are now being adapted massively, many startups are now launching their business with this digital entity which provides more assurance in every manner. It also makes Security Token Offering Services a much sought-after service for every entrepreneur. With this particular token, cryptocurrency steps into the legal domain and lets everyone use it without any fear of losing the money.
It is not a tough job to hire a security token developer as there are several companies offering this service. However, you need be careful while choosing the developer, it is best to go for a company that has been dealing with blockchain technology for a while now. For the best services on STO, you can contact Coin Developer India which has been dealing with cryptos, ICOs and every aspect of blockchain since its beginning.