CryptoURANUS Economics: Security Token Offering [STO]: Defined in CryptoCurrency


Thursday, May 6, 2021

Security Token Offering [STO]: Defined in CryptoCurrency

Security Token Offering [STO]: Defined in CryptoCurrency

A Security Token Offering (STO), is defined as a way for investors to use their money to support a new cryptocurrency project in a way that US Securities and Exchange Commission (SEC) will approve. 

Originally, investors would participate in an Initial Coin or Token Offering (ICO/ITO) and in return received some crypto. The hope was that the team would develop something valuable with the money.

The problem is, in the near future, ICOs and ITOs may not comply with American SEC laws. That means some cryptocurrencies who have already had an ICO or ITO may have future regulation and penalties applied.

However, an STO complies with many of the rules and regulations expected to be used in the cryptocurrency space.

A security is an investment that is backed by real-world value. In other words, it represents something actually valuable:

  • A security could represent a tiny ownership of a company (like a stock).
  • A security could represent money a government or company borrowed and promises to pay you back (like a bond).
  • A security could also represent ownership of some other asset, profit, or revenue. An STO uses this model.

To invest in an STO, you must be an accredited investor. As an individual that means you must meet one of these two requirements:

  • A single individual needs an income of at least $200,000 or a couple with at least $150,000 for the last two years and expect to earn the same or greater this year.
  • Net worth of over $1,000,000 excluding the value of your primary home.

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