Structuring issue of tokens STO

Structuring the emission of tokens

Users who participate in the ICO usually own utility tokens. Yet, the people who are associated with the STO becomes the owner of the tokens acting as securities. Basically, assets are attached to these tokens. Also, the owner can receive a share of the profits. Tokens can be an investment instrument, a debt instrument, a derivative or a digital part of an asset.

Security tokens are a reliable, long-term instrument for profitable deposits for investors, as they are backed by a certain asset. In addition, the Securities Documents Act offers certain guarantees to investors.

An important plus of security tokens is that the underlying assets can be divided into small units. It is thanks to this feature that assets become liquid, accessible to every investor. In addition, due to the use of blockchain, transactions become transparent, fast, reliable, you can easily remove some links in the chain of intermediaries, reduce commissions and overall transaction costs.

STO: what are the difficulties of conducting, what should be taken into account

Many are accustomed to the fact that the generation of tokens is considered an international event. Investors from all regions of the planet should participate in this process. In addition, the procedure must be accompanied by a public marketing organization.

The main feature of the STO is that the project specialists comply with the requirements of the law regarding how to handle securities in the jurisdiction where the issuer is located, the tokens themselves are offered to investors.

Regulation

There are certain methods that allow you to structure STO:

1. Registration of security tokens, their placement. An important advantage of this option is the following point: you can carry out a marketing campaign available to all users, provide tokens to every investor, even a beginner. However, this method is quite expensive and time consuming. In addition, rather serious requirements are imposed on the organizers of the project regarding financial audit, disclosure of important data.
2. Structuring the STO as a private placement, subject to exceptions that make it possible not to register the production of important papers. If a private placement occurs, the tokens are sold mainly by professional or accredited market participants (sometimes a limited number of investors participate). It is not necessary to prepare, register an issue prospectus in such a situation. It is only required to prepare an information memorandum.
3. Sometimes there is an offer of unregistered securities for certain persons, but only when the highest value of the fees is limited. The maximum amount can be 8,000,000 euros. In this case, the prospectus is also not needed.

Note that the securities laws that STO organizers must follow are not always limited to the above requirements. The requirements that frameworks put forward in accordance with general investment schemes and so on are also taken into account.

Blockchain as a method to take into account property rights

Regulation does not always keep up with innovations and technologies. Despite the fact that the blockchain has a lot of advantages, the use of this technology, for example, to maintain a register of company shareholders, is still available in certain states. Because of this, the choice of jurisdiction in the tokenization of assets is significantly reduced.

Things are much worse in the process, which concerns the accounting of rights to real estate and territories. That is why real estate tokenization platforms create and tokenize shares of a certain holding company that owns the target assets.

Technical feature of the question

In order for the STO project to work stably, it is necessary to comply with the requirements of the law during the initial promotion of tokens, as well as the subsequent one, when transactions are performed.

At the moment, there are various platforms that solve this problem in different ways and provide users with tools for issuing valuable documents, validating future transactions, and so on.

Reliable protection of underlying assets

One of the serious tasks is to provide reliable legal connections of tokens with underlying assets, the security of the assets themselves. A particular difficulty arises when tokenization is performed, for example, of cars, paintings, precious metals and other movable property.

Tokenization is considered a tool that increases liquidity, eliminates intermediaries, and reduces transaction costs by several times. It can be a great solution for regular markets.

Conclusion

Despite the fact that the system has certain difficulties in implementation, the modern token market has great potential and, according to some information, its capitalization will soon reach billions of dollars.