{"id":776,"date":"2018-09-21T20:38:31","date_gmt":"2018-09-21T15:08:31","guid":{"rendered":"https:\/\/blockchainappfactory.com\/blog\/?p=776"},"modified":"2020-10-12T14:54:58","modified_gmt":"2020-10-12T09:24:58","slug":"the-regulations-begin-new-way-with-security-token-offering","status":"publish","type":"post","link":"https:\/\/www.blockchainappfactory.com\/blog\/the-regulations-begin-new-way-with-security-token-offering\/","title":{"rendered":"Let the Regulations Begin! A New Way with Security Token Offering – Part 1"},"content":{"rendered":"

If you are planning to raise through traditional funding methods by following regulations, then try the Security Token route. The Security Token Offering have the same array of financial rights similar to IPOs markets such as equity, dividends, voting rights, and buy-back rights to name a few and all these forms in the framework of an underlying asset. The advantages of tokenization<\/strong><\/a> are numerous such as fractionalization of assets, increased liquidity and low fees thereby increasing the market efficiency.<\/span><\/p>\n

How to create your very own STO?<\/span><\/h3>\n

Just follow the list below to know the initial requirements<\/strong><\/span><\/p>\n

The greatest benefit is that there is a global pool of capital to the issuer. These tokens have to be traded within the regulations of each country, thereby, being more price attractive to investors. STOs, give a recognizable regulatory framework for the institutional investors to join as investments and for crypto investors for the technological innovation.<\/span><\/p>\n

So what to tokenize?<\/span><\/h4>\n

VC Funds Tokenizations –<\/strong> Each token represents a fixed amount of investor rights such as profit sharing, direct or indirect buyback architectures, and other liquidity framework requirements. A traditional VC locks the fund for 7-10 years, however, in a tokenized VC, liquidity begins at the end of 12 months as per U.S. Securities Laws.<\/span><\/p>\n

Equity Tokens –<\/strong> Ownership stakes benefits such as limited partnership(LP) shares, voting rights, dividends, and profit shares will benefit through the tokenization process. Due to blockchain and smart contracts, there is automated compliance, reduction in operational costs, and layered shared rights. This enables overall flexibility to the process.<\/span><\/p>\n

Asset-Backed Tokens –<\/strong> Asset-backed tokens are right to ownership to real-world assets like commodities, power plants, and commercial real estate. These can be fungible or non-fungible assets requiring an abstraction layer. Larger assets can be divided to create a unique and diversified portfolio comparing themselves to derivatives but in a more transparent way.<\/span><\/p>\n

Crypto-bonds –<\/strong> These are debt instruments that can act as bonds constituting a fixed claim to future streams of income. A tokenized debt is a topic of debate maintaining a seniority claim over equity in repayment and accreditation requirements. However, blockchain-based crypto-bonds will eliminate the middlemen.<\/span><\/p>\n

There are two types of STOs<\/strong>\u00a0<\/span><\/p>\n