Guide To An STO: Types Of Securities
The definition of a 'security' differs from state to state. For example, the European Union (EU) These would be equity securities and debt securities, but get to that later. In the US, however, a wider range of subjects falls within the definition of a security.
It is how you can use it. To be labeled security, the asset has to meet 4 criteria:
1. It is a financial investment.
2. The investor is expecting profits from his investment.
3. The money is invested in a common enterprise.
4. The profit comes solely from the third party.
You're probably thinking: 'Hey, but then literally every ICO token falls under these criteria!' And you know what you’re generally getting it right! That's why we strongly approve STO. Otherwise, an ICO can be subject to unregistered securities.
Therefore, it would be a good idea to choose a legal perspective. And this brings us to the types of STO security tokens.
► Equity Tokens
The state of the tokens are in the underlying enterprise. Given with a regular market stock purchase, equity token holders In the case of other profits, the future of the future.
It’s back to you. Corporate performance. Investors are buying security tokens with an anticipation that they will increase in value. And when it happens, they can get a profit.
► Asset-backed Tokens
An asset-backed token is associated with a tangible or intangible object of certain value. It is a real estate, a real estate supply, a supply of goods, etc.
► Debt Tokens
Debt tokens are mostly short-term loans with an interest rate. In the future, there was a loss of money for investors.
Which type of tokenizing is the best for your project? You can't fly blind here. This is a matter of discussion with legal advisors and industry experts. You are not in a rush. And of course, if you want to do so on.
As blockchain continues to disrupt various global markets, it’s easy to see that this technology has revolutionized standard practices in the world of business. Along with the rise and popularity of blockchain…
Lots of crypto investors and enthusiasts are still avoiding some unpleasant experiences that accompanied the 2017 ICO drop. IEOs are gradually becoming the most preferred method for crypto projects to…