Security Token FAQ
1. What is a Security Token Offering (STO)?
STO (Security Token Offering) is a process of issuing and subsequent sale of digital tokens that have one or more characteristics of securities (shareholder right, right to get dividends, right to manage, etc.). These digital tokens are based on the blockchain technology, which allows increasing the security and reliability of the whole process. Thus, these tokens allow you to transfer the value of various objects into digital space. Such objects can be companies, real estate, investment funds, art objects and much more.
2. How to participate in STO?
Investing in STO is much easier than buying traditional stocks. After selecting projects that interest you, go to the official STO website (make sure you are on the right website and take all the information from there). As a rule, detailed instructions for buying tokens are available on the project website. Read them carefully and follow step by step.
In general, the process consists of two main stages. The first is the KYC / AML procedures (identification of the person and in some cases the status as an investor). The second is the purchase of tokens in exchange for fiat money or cryptocurrency. To make a purchase, you will need a cryptocurrency wallet in the blockchain network, which the project uses to issue its tokens (currently, the main ones are Ethereum, NEO, EOS, and others).
3. What is Private Sale, Presale, STO?
The Security Token Offering process typically consists of three main steps - Private Sale, Pre-sale and the STO (Main sale). In some cases, at the discretion of the STO organizer, some of these steps may be missing, and also some steps may be divided into sub steps.
As a rule, Private STO implies access to the purchase of tokens by a limited number of private investors, which are chosen by the STO organizer. Most often this is done in order to attract initial capital from large investors, thus reducing the number of potential investors. At the same time, such investors have the opportunity to invest at the most attractive price.
Presale usually has no such restrictions and is available to a wide range of people. The difference from the main sale is in various bonus and discount systems, provided for the first investors who invest at an earlier stage and with higher risks. Investments at the stage of Main sale can be considered the safest since at this point the amount of money raised at the earlier stages is already known. However, the cost of tokens will already be significantly higher.
4. Security Token Types (ERC-1400..)
All Security Tokens are based on blockchain technology. The choice of technology remains at the discretion of the STO organizer. These can be tokens based on existing blockchain networks (such as Ethereum, NEO and others), as well as their own blockchain solutions (which happens much less common). At the same time, when creating tokens based on known blockchain networks, there are also options - to use an already existing type of token, or, again, create your own.
The most common and logical solution is to use ready-made solutions, as they are community tested and have more trust.
At the moment, the most popular platform for the token creation - Ethereum. Types are ERC-20 and ERC-777. The same tokens are used in ICOs. At the same time, a new type of token is being discussed, which is developed specifically for Security Tokens release and has a number of significant differences - the ERC-1400 token. There is also the ST-20 token, on the Ethereum platform, developed by the private company Polymath to release tokens of its partners.
5. Legislation in the field of securities
The legal status of STO is not yet fully defined, since the entire cryptocurrency sphere itself originated only recently and does not have proper regulation. At the same time, many countries are already considering or adopting some laws aimed at regulating this sphere in order to protect their citizens. In particular, STO appeared as a legal evolution from ICO, the main disadvantage of which was investor insecurity. In general, we can say that the legislation in the field of STO is similar to that for IPO and stock trading. The most perfect legislation in the world in this field is in the USA. That is why many STO projects seek to legalize their placement of tokens in accordance with the requirements of the SEC (The United States Securities and Exchange Commission).
6. STO profile
These percentages shows the completeness of the project profile. The more data about the project, the higher the percentage.
Attention: This indicator is not a rating and does not mean recommendations for investing. STOscope does not encourage investing in any STOs published on the platform. Make sure to do your own thorough research before putting money into Security Token Offerings.