STO

Given the wide acceptance of ICOs as means of giving out shares in a company through crypto, there was increased concern over the lack of a regulatory framework guiding the use of ICOs when companies intend to raise capital. As a result of an increased flood of fraudulent ICOs, many began to call for rules and regulations. This rules and regulations were aimed basically at one thing, which was to protect the investor. With this, we have to dissect the definition.

Security: In blockchain, security is regarded here as a financial instrument that a business entity uses to raise capital. In exchange for buying a security, the investor receives certain rights from the issuer. In cases of a bond issue, the investor receives interest on the principal of the bond.

In blockchain, tokenized securities do virtually the same thing as traditional securities as the holders of token securities get to have a say in the decision-making process of a company as they also have a considerable share of the company’s profits.

 

This listed above was the major reason industry captains began to shift perspective and focus to the security token offerings. They realized the volatility that was attached to the ICOs and yearned for a centralized blockchain system as they believed this would allow for a regulatory oversight and due diligence which will help mitigate the risk.

STO offers access to securities tokens opposed to utility tokens. It is backed by physical tangible assets and it represents a portion of shares of the company’s stock subject to a legal framework of government regulations, similar to the stock market. Interested investors who purchase STOs have an ownership right to an interest in the company’s assets and income unlike the utility tokens were investors are given a mere “redeemable voucher” for services in the future. Before you can invest in an STO, you have to be sure that:

1.It is an investment in a business enterprise

2.You are investing a significant portion of money or assets.

3.There is an expected profit to be derived from the investment.

STO is the next big blockchain technology taking over the industry as it offers more security and it is open to regulatory authorities, as well as it is legally sound and can not be mistaken to be a fraudulent activity. In issuing an STO, you are mitigating your investment risk with venture capitalists and institutionalized investors, major reason is that their risk-reward model is far lower than the regular structured organizations. STO is registered with the securities and exchange commission (SEC) and they take advantage of the exemptions stated in the act.

The brainbox of POLYMATH, a blockchain startup brought about the idea of STOs. The concept was to gain attention quickly as the capital sourcing market needed a better market solution and the STO provided a more improved solution as opposed to the ICOs. Polymath solves the "Centralization of Data" problem by assisting companies to invent their own securities tokens. This protocol granted permission access to every crypto address that met the necessary requirements to invest in a security offering. These restrictions further boosted the confidence investors had in the security token offering.

The regulations protected the rights of an investor and weeded out business entities that were ineffective with securing an investment opportunity which was almost certain to result in losses which came from malicious ICO launches. STOs solve all issues that arise from regulations which coerce business entities to reveal sufficient information about their projects and employees. Regulations make crypto safe and secured by making sure investors do not run into scam attempts by internet fraudsters.

STOs are very viable and with security restrictions solved, potential investors are expected to use STOs more often as this will raise more capital from crypto coins like Ethereum and Bitcoin. Also this brings about more liquidity in the cryptocurrency markets as STOs are preferred to exchange trading and regular ICOs. More capital inflow means STOs are better at being a viable currency to be continuously used for commercial activities.

Although as at this moment, there seems to be no concrete operational secondary market for the exchange of STOs, there is a development in place which is at the planning stage. An STO exchange would require the services of a broker who will be subjected to harsh regulatory laws including what portion of money will be taking for his services in form of commission, account maintenance and annual filings.

Our STO development have a starting price of 449,000$ and can be completely customized base on your need.