What is An STO and How It Works?

What is An STO and How It Works?

STO is the abbreviation of security token offering.

It is similar to ICO which uses the coin or token as an asset in the investment. There is a difference though. The security token signifies the ownership information of assets like funds, real estate, bonds, and stocks. In the STO, the investment product is comprehensive with the physical assets like company or property, or everything else. Meanwhile, the security token represents the ownership information. The data is within the blockchain. In the conventional investment method, your ownership information will be recorded on physical documents or the soft copy in PDF. Meanwhile, the STO conducts the same process but your information is recorded on a blockchain and converted into a token.

The coin in STO may not be used for the environment or investment. It focuses on the investment contract supervised by law. STO is also different from IPO. The most significant difference is that STO issues the tokens on the blockchain. Meanwhile, IPO issues the certificates in conventional markets. Being involved in the STOs can be difficult because these are regulated depending on the jurisdiction of the party. For instance, the SEC – Securities and Exchange Commission really emphasizes the importance of STO’s regulations. According to SEC, ICO rating will be categorized as a security if it is prevalent with investment contract understanding. Security tokens have special characteristics. We could define them as a specific investment like a share or debt instrument.

Any countries have banned STO. You won’t be seeing any STORY in these countries: India, Bolivia, China, Vietnam, South Korea, Algeria, Namibia, Morocco, Zimbabwe, Lebanon, Pakistan, Bangladesh, India, and Nepal. If your countries are not on the list, that does not merely mean that STO is allowed. Perhaps, your governments are still weighing to issue the regulations. The real-world asset is backing the security token. As we know about the utility token, it can be daunting to assess the value of the token although we’ve seen their good ICO rating on the ICO list. But with the security token, you will have peace of mind since it is backed with the physical asset. It is a lot easier to confirm the token value. STO is much cheaper compared to the traditional IPO. The strongest reason is that because there is no middleman.

Meanwhile, the smart contracts of security token will also minimize the connection to lawyers. That means the blockchain technology can help you to alter the paperwork. The liquidity of a security token is also great. No matter where you are, you will be able to trade 24/7. STOs are legal. With the increasing number of investors, the volatility can go away. But there will always be challenges lurking in the shadows. Perhaps, the most challenging aspect of STO is the changes in regulation. The increased regulation can revolve around ownership tracking, exchange approvals, and so on. The developer of the STO should be aware of the securities laws to comply. The regulations in some countries might also limit folks to invest in STO. If you are interested in it, make sure you do your research before proceeding.

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Lorena Boanda
Lorena Boanda
Experienced Chief Executive Officer at Brantell, Coindoo, and TheCCPress, with a demonstrated history of working in the writing and editing industry. Skilled in SEO Content, Copywriting, Creative Writing, Copy Editing, Translation, and Proofreading.


4 Interesting Notes Regarding Milestone Token Offerings

4 Interesting Notes Regarding Milestone Token Offerings

Token offerings come in many different shapes, forms, and sizes.

That is only par for the course, as the cryptocurrency industry continues to grow and evolve at all times. Milestone Token offerings are seemingly the new hot trend, although they are not as common as one might think. Another interesting business model, albeit one with a bit more merit compared to other types of token offerings.

The Milestone Token Offering Idea

Whereas most token offerings are based on selling a large number of tokens in advance prior to launching a project, the MTO takes a different approach. It is somewhat refreshing to see teams explore options which do not require investors to invest in hopium and hype, but rather look at a project and see what has been realized to date. Whether or not this will attract as much attention as Initial, Security, or Exchange Token offerings, is a very different matter altogether.

As the name somewhat suggests, the Milestone Token offering is very different. Teams will only offer tokens for sale once their development reaches a new milestone on the roadmap. As such, the initial development is very little upfront funding,  and it pushes the developers to effectively keep working on the project moving forward. It seems to be a more goal-driven token offering rather than a money-driven effort, but it remains to be seen if that will yield more successful blockchain projects in the years to come.

What about Regulation?

By the look of things, milestone token offerings will need to adhere to securities laws in the United States and beyond. It will fall into a few possible categories when it comes to securities, but it is advised any project exploring this option to get in touch with the proper authorities. After all, it is also possible to issue utility tokens through this model, but it seems more likely security-esque offerings will become the norm where this business model are concerned.

One also has to wonder who will be able to participate as an investor. Given how this business model seems to lean toward being regulatory compliant, it is not impossible to expect going through a thorough user verification process. After all, the goal of an MTO is to build a bigger community and attract additional funding based on the past and future developments. As such, accredited investors seem to be a very plausible target, especially for projects which are very serious about being regulatory compliant.

Multi-phase Funding is Possible

It would appear there are some interesting options for companies exploring a milestone token offering. One can organize multiple of these token sales to attract a few dozen new investors along the way. As such, they can split every token sale into different batches if they see fit to ensure as many people can get in on the action as possible. One project currently exploring this option is Storecoin, as they will offer multiple phased pricing rounds. A peculiar option to explore, albeit one that may have some merit.

Is it a Viable Business Model?

That is perhaps the most difficult question waiting to be answered. While milestone token offerings are not exactly the big hype as of yet, it would appear there may be a growing interest in this business model moving forward. Especially for legitimate companies, this is a good alternative to ICOs, STOs, and ETOs. Gaining traction with this token sale model may be very difficult at first, as these new models tend to get scrutinized quite a bit. That is to be expected, as token sales do not enjoy the best reputation in the cryptocurrency industry.

Article Produced By
JP Buntinx


Ethereum Consortium Launches Token Initiative With Microsoft JPMorgan Chase Others

Ethereum Consortium Launches Token Initiative With Microsoft, JPMorgan Chase, Others



The Enterprise Ethereum Alliance (EEA) has launched a blockchain-neutral Token

Taxonomy Initiative in partnership with major firms, according to a press release from EEA on April 17. The initiative will seek to define tokens in non-technical and cross-industry terms in a bid to drive enterprise token adoption at scale. The EEA describes itself “a member-driven standards organization whose charter is to develop open, blockchain specifications that drive harmonization and interoperability.” Members of the initiative reportedly include global consulting firm Accenture, major banks Santander and JPMorgan Chase, blockchain incubator ConsenSys, Big Four auditor EY, tech giants Intel, Microsoft and IBM, blockchain consortium R3, international think-tank The Blockchain Research Institute, blockchain r&d firm Clearmatics and others.

The new Token Taxonomy Initiative will aim to establish a shared set of terms and definitions for tokens — whichever blockchain they derive from — as a cornerstone for businesses and developers. Standardization, the EEA’s director Ron Resnick argues, can unlock the frictionless use of tokens “to serve as, or provide access to, a set of goods, financial assets, securities, services, value or content” within enterprise-grade blockchain applications.

As well as clarifying the concept and scope of the token model, the initiative will seek to address use cases, taxonomy and terminology and technical specifications. To this end, the project will aim to establish technical standards that can counter fragmentation between multiple blockchain protocols and ensure interoperability between platforms and use cases — whether the tokens serve currency-like purposes or represent unique assets. The initiative will be structured to include a Token Taxonomy Framework accompanied by an educational initiative, which will be run through structured Token Definition Workshops.

As previously reported, the EEA — which counts over 500 members — is engaged in ongoing token standards work, which began with a focus on Ethereum (ETH) specifications. In fall 2018, Hyperledger and EEA announced their mutual associated membership. The organization extended its global outreach by opening a regional office in China this February. That same month, the EEA announced it would be launching a so-called “token task force,” to be focused on ETH-derived fungible ERC-20 and non-fungible ERC-721 tokens.

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Erica Borges