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What is a Security Token Offering?
A security token offering (STO) / tokenized IPO is a type of public offering in which tokenized digital securities, known as security tokens, are traded in cryptocurrency exchanges, or security token exchanges. Tokens can be used to trade real financial assets such as equities and fixed income, and use a blockchain virtual ledger system to store and validate token transactions.
Benefits of Security Token Offerings:
Enhanced compliance with regulations:
STO can provide investors with voting rights, transparency, legal assurance, claims on profits and dividends, as well as compliance and proper corporate governance by the regulated exchange. They need to fulfill under securities law and internal processes to ensure tracking of ownerships and Know-Your-Customer (KYC), Anti-Money Laundering (AML) checks.
Global 24/7 Trading
This means STOs provide a huge opportunity for issuers to gain access to an international pool of capital, which can help grow their business at a faster pace. Trading in the security token market is 24/7/365.
Efficiency and Convenience
Issuance, reporting, settlement, clearance, underwriting, exchange, registry, and compliance do not involve human intervention in a security token. Hence the convenience to acquire or dispose of them around the clock is seamless and can be globally traded.
STOs will be the future of capital raising and investors seeking bespoke investment opportunities. With STO numbers quickly gaining momentum, it is difficult to ignore this powerful force of Digital Tokenization Securities!