What is a Security Token Offering (STO)
What is the definition of a Security Token Offering (STO) ?
STO stands for Security Token Offering. A security token offering is any asset or security that has been digitized on the blockchain, a digital token representation of a “security” as defined by the U.S. SEC (Securities and Exchange Commission). A token represents an entitlement to ownership of the issuer’s asset, equity, or debt security.
How does an (STO) security token offering work
A security token offering works by creating a digital representation of an asset on the blockchain. Giving this “digital representation” or “token” physical world value since an asset in the real world backs it. For example, using U.S. Commercial Real Estate as an asset to then digitizes as a security. You can now use these tokens for crowd funding as well as trade them internationally. People realized early on that the purpose of all of the SEC and FINRA licensed intermediaries within the industry was to enforce the transaction rules. Now their roles could be replaced with blockchain technology saving both the fund and the investor time and money. It is undeniable that the underlying “blockchain” technology is revolutionary.
Now when you combine crowdfunding platforms with innovative contract technology on the blockchain, you have the potential to raise unlimited amounts of money worldwide and remain 100% in compliance with SEC rules.