In one of our previous post we discussed extensively about how ICOs works but today we will be talking about STOs which is the latest way through crypto startups try to gather funds to launch their crypto innovations while also playing safe to the existing financial rule and regulations.
What does STOs stands for?
STOs in full means Security Tokens Offerings which is a type of crowdfunding using cryptocurrencies to accumulate funds from investors with the guarantee that such token will appreciate in value. Security tokens offering are used by crypto companies that want to ensure full compliance
with securities laws and regulations. You might be interesting in reading about deciding on joining crypto or not.
With the high increase in crypto related scams and non functioning products as promised by many crypto projects, there are now more stringent laws regarding investing, hodling or trading cryptocurrencies in different countries.
Security Token Offerings is still growing and keeps generating interest globally as an alternative to ICOs and a more better way to crowdfunding.
Differences Between ICOs and STOs.
ICOs are known to be non compliance to rules and regulations while STOs are geared towards conforming with governmental securities laws.
STOs are securities are considered to be financial instruments subjected to tax laws while ICOs are not though different countries with different financial regulations.
With STOs coming on board , it might be a more easier way to raise funds for projects as it more open to scrutiny than ICOs and can make institutional investors to have more confidence about the crypto space.
In conclusion, it is to be noted that the whole idea of STOs is still very new and it might take a while to see it get more wider adoption as a guaranteed way of crowdfunding as ICOs are still very much popular. It is important that an investor do thorough research before making any investment moves.