The crowdfunding method for crypto projects started with Initial Coin Offering or ICO in 2017. Though ICO was a successful model to raise funds, there were many scams that made investors dubious to invest again in crypto projects. STO development is a fundraising model which combines both ICO and IPO so that investors can gain trust over the project. If you are a cryptopreneur currently looking for ways to raise funds for your crypto project, take a glance at Security Token Offering development here.
All about Security Token Offering
Security Token Offering is nothing but ICO along with juridical compliance. Yes! It overcomes the shortcomings of ICO by providing a tokenized security offering backed up by assets. In addition to that, they are fully submissive to regulatory governance. To make it simple, STO is a combination of ICO and IPO. Moreover, it registers the tokens in the blockchain as in ICO and it offers a security asset as in IPO.
Security token offerings maintain the balance between getting funds and following the security laws. Likewise, security tokens represent a part or share in the company as in an IPO except for the fact that they are registered in the blockchain.
Different types of Security tokens
Similar to IPO there are many kinds of security tokens that can be included as a security asset in an STO. They are
- Equity token
- Utility token
- Debt token
- Reserve asset token
It is similar to traditional stocks, that it represents the ownership of company stocks.
A utility token is usually issued to raise capital for a project in its early stages. Further, it promises the investors with a product or service later
A debt token is issued when a company has no stocks or assets to give as security. On the contrary, this token promises to pay back in the future in the form of profit or assets.
Reserve Asset Token
A reserve asset token is a special kind of token that allows the individual to tokenize physical assets. Companies using this type of token will give certain rights on the asset to the investors.
Benefits of Security tokens
The benefits of offering security tokens to the investors are
- The investors can get assurance that their ownership stake is preserved in the blockchain ledger. As well as, it is unalterable and unhackable so once registered, it stays permanently in the blockchain. In simple terms, they offer Security.
- It is a bridge between traditional finance and blockchain. However, there is no centralization associated and it still follows the juridical compliance of the local governance
- The risk of investing in an ICO, dubious scams are all regulated and it started a credible finance system in the crypto industry
- It opens up capital to the global market. This adds liquidity to the token and provides opportunities for investors around the world to buy shares of assets globally.
Key features in STO Development
Blockchain and smart contract integration- The STO has to be built in advanced blockchain technology. Finally, integrating smart contracts allows smooth, secured, and fast transactions.
Legal compliance- The main goal of an STO is to abide by the legal procedures. The STO must follow the legal regulations to have a smooth business operation.
KYC integration- The investors will get reliability when there are multiple security checks. This can help avoid scams and frauds
Multi-currency accommodation- The investors must get a seamless experience when launching an STO. So it is important to provide a Multi-Currency exchange platform
Flexible payment gateway- Offering multiple payment gateways for the investors will also create a trust and better investor experience. Offering them to pay through whatever currency like fiat currency, cryptocurrencies or debit cards, etc will attract more investors
Top security features- security is the major concern of investors these days. Offering a highly secured platform is the key.
Multi-currency wallets- The investors should be provided with a secured multi-currency wallet. A wallet with advanced features can allow investors to store multiple currencies.
Apart from the above features, having multi-language support to reach the global audience and providing 24/7 trading options are also appreciable.
- Search engine optimized Website
- Social media marketing
- Influencer marketing
- PR campaigns
- Press release
The enormous rise of the cryptocurrency market is attracting more and more investors. Again, it is important to do a good job of attracting investors towards crowdfunding in order for the project to move further. In other words, companies looking forward to raising their capital will come towards STO development. As a result it is more beneficial to the companies than other traditional models. If you are looking for a perfect fundraising model, contact an expert if discuss your business is ready for a security token offering.