The blockchain is a core technique when it comes to supporting crypto assets like Bitcoin, Ether, security tokens and utility tokens. These crypto-assets have an enormous capacity to bring a complete transformation in the financial services marketplace. Many people are already familiar with utility tokens, and the security tokens are relatively novel concept. In this post, we shall elucidate the launching process of an STO.
A token, when subjected to federal security regulations, is known as a security token. Such tokens can derive its valuation from other external and tradable assets. Some of the examples of security tokens are equity tokens, debt tokens, utility and asset-backed tokens.
How to Launch Security Token Offering?
The STO Launching Process can be bifurcated into the following stages:
- Preparation
- Pre-STO
- STO for investors
- Post-STO
Stage 1: Preparation
- Coming up with an idea for the security token and consulting a legal advisor and deciding the modus operandi for the token to gain value. The token’s value can be determined through the three principles:
- Role
- Purpose
- Feature
Every role defined for the token has a specified purpose against which the features can be apprehended depending on the need of the business.
- The regulations to be followed in the process of creating a security token. For the token to be considered as a security token, it must qualify the Howey Test determined by the US Supreme Court. Howey test can be segmented as 3 independent criteria that must be fulfilled for creating a security token. They are:
- An investment of capital
- In the identical enterprise
- With the expectation of profits from the struggles of others.
If not, then the token will be deemed as a utility token. The regulations for the security token in diverse for every country. The issuer will have to adhere to the legislation of the respective countries in which he plans to issue the tokens.
- The next step is selecting the correct security token platform. Security tokens require unique infrastructure and a new approach. It is a cumbersome process; therefore, you need to have a piece of thorough knowledge about the security issuance platforms.
Given below is the list of the top security token platforms to launch an STO.
- Polymath
- Harbor
- Securitize
- Securrency
- Swarm
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