- What is STO Development
STO development, offers an intuitive website that would allow you to sell your tokens and encourage investors to start immediately. Our STO experts develop a customized platform for your STO offerings that would attract more customers.
Security Tokens are digital securities such as assets that are used for trading in exchange of funds from the investors. The creation of these tokens is through the tokenization of solid assets. Security tokens need to be compliant with Legal securities and regulations of specific regions. Organizations that have just kick-started are inclining towards STO to build trust among the investors for their projects.
BENEFITS OF STO DEVELOPMENT:
- Highly secure
- Standard regulatory compliances
- Less Volatile
- Automated processes
- Opportunities for fundraising
- Highly efficient
- 24/7 support
Advantages Of STO DEVELOPMENT:
Low barrier for entry : Floating on a stock exchangevia a traditional IPO is a time-consuming and arduous process only available to large companies looking to target over US 10m. It required lots of middlemen — including brokers, Exchange fees, extensive due diligence, etc — Costing large sums of money. That is to say, STO takes a short time and costs less, and it can also facilitate financing activities.
Greater flexibility for business owners : STOs provide much greater flexibility in terms of how you actually run your business — comparable only to a privately-held company. Security tokens also have more transparent value based on the underlying assets, meaning your business is less likely to be shorted, even with a small number of large investors.
Attract global investors : Token standards are uniform across different regions, which means tokens can be easily bought and traded by investors around the world.In fact, based on the diversity of the currency and securities markets, security tokens tend to be much more liquid than privately held shares.
Separate ownership: Security tokens allow you to divide underlying assets into smaller units. This will make it easier for some small investors to participate in matching investments and have the same rights to securities.
BFFI is providing specialized STO services to blockchain entrepreneurs and emerging growth companies, whether in the US, Europe or Australia. We believe that STO will be more credible than ICO, giving investors trust and support. Three types of Token-
- 1. Utility token- Token that only has value in the usedof a system.Most ICOs use utility tokens because they’re considered generally safe for most countries in the world. Investors buy an early stake in these tokens with the assumption that the price will go up once the utility increases and the businesses develop. From a legal point of view the issue is that the intention is that the value will go up so the SEC uses this logic to say that utility tokens are a security.
- Commodity tokens- are tokens backed by a standard assets that already have an independent value such as gold, oil or a sovereign currency.A lot of projects focus on pegging tokens to sovereign currencies, USD being most common. Most of their strategies are fairly simple with users giving cash to a custodial account that is regularly audited by an outside firm but there have been rumors of problems with the largest of these tokens, Tether, that they may not have nearly as much money as they state they do.
- Security tokens are tokens that equate to an ownership stake in a company or DAO.When you buy a security token you’re buying it with the intention that the value will be derived on the value the company or its future profits/dividends may be worth.There are a lot of existing valuation methodologies, regulation and systems to doing security tokens. All of this regulation forces them to be the most restrictive in who can purchase them. Most of the systems in place for US investors will require you to be an “accredited investor” which requires the investor to have a net worth of at least $1 million or an income of over $200,000 for the last two years.
Why More Companies Are Choosing Security Token Offering (STO)
STOs are better in terms of features and security against both traditional security offerings and ICOs. Here are some of the advantages of STOs over other funding mechanisms:
High Transparency-As security tokens (or any other cryptocurrency in that matter) are developed on the blockchain tech, the transactions involving these currencies are public and transparent. The benefit is that such transactions are easy to verify in case of a dispute.
Traditional investments, including securities, have a lengthy transaction procedure since each transaction goes through middlemen, such as banks or stock authorities, before execution, which only increases the overall time of transaction processing. Security tokens, on the other hand, have faster execution and lower processing time because of the lack of middlemen.
One of the primary reasons why ICOs have started losing their grip over investors is the lack of accountability because, unlike security tokens, utility tokens need not be regulated. This is why fraudulent activities and projects have increased a lot in this space. And this is why, investors are moving towards STO, which is a more secure investment product.
24/7 Instant Trading-
One of the major benefits of security tokens is that they can be traded at any time and from anywhere. Since cryptocurrency trading is a global activity which is performed online, the token holders can engage in security token trading at their own pace and convenience.
In conclusion, before using STOs to attract investors, issuers should ensure that they comply with the relevant requirements and regulations. The rise of technology has led to more seamless transactions along with higher risks of non-compliance. Given the unique features of blockchain technology, the Securities and Futures Commission is tightening the rules on anti-money laundering and counter financing of terrorism, aiming to align withFSTB’s proposal to regulate the trading of virtual assets. Apparently, increasing regulations may slow down the application of STOs; however, it is expected that a more extensive regulatory framework will provide more certainty for stakeholders regarding the proper process of STOs.
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