Choosing Between ICO & STO
The incredible capital raises from security ICOs make it a attractive solution compared to utility ICO’s. However, a number of regulations and legal requirements connected to starting an STO only warrant going through the complexity of raising funds in this way if some of the scenarios below are met:
- Your company is growing exponentially.
- Your annual revenue has hit and exceeded the $10 million mark.
- Your business has broken into the international scene.
- You are looking for funding from large institutions.
- You have set high liquidity terms for your token.
- A transferrable asset works better than a utility token for you.
Back in the day, an investor needed to sign a contract whenever they bought a security. The advent of security tokens has counted on the blockchain technology to provide a platform for the execution of the contract. The right of ownership is proven by a consensus that is set up in the blockchain’s protocol. Security token is backed up by a real-world asset. It can be thought of as bonds, company’s stock or a priced asset.
Dividends, revenue shares and profit shares are some of the benefits that investors accrued from traditional securities. Security token offerings work in the same way and offer similar benefits for the holders. Read on to find out how our STOs are modelled.
Why Do Founders Prefer Security Token Offerings?
1. They are a better source of institutional capital
Security Token Offerings have provided private equity groups and institutions with a route into the STO market and subsequently into the global scene. The borders that had restricted the institutions from accessing large capital have subsequently been broken down thanks to the blockchain technology. Medium-sized companies no longer have to source funds from single limited jurisdictions. Founders are keen on making the most of this opportunity.
2. Marketing of Offerings is modernised
The mid-size companies made it a point to reward key players who were involved in publicising their agenda and offerings in the global market. Affiliate programs have been heavily used to this end. The different brand ambassadors use different social media platforms and set-up meetings to make the projects known. Although Security Token Offerings require more legal work compared to utility ICOs, the tools for ICO capital raising has paved a way for STO’s as a fundraising tool as well.
3. Entry is less complicated
4. More for less
They also drive the growth of the business as the founders are not constantly looking over their shoulders. Their position and security on the company’s board is always guaranteed ensuring that they have less sleepless nights. Token holders are only entitled to dividends and a share of the profits. Founders can also trade the tokens for company shares further cementing their position and authority in the firm. All these benefits do not impede the higher valuations that are a guarantee when Security Token Offerings are involved.
5. They surpass traditional offerings greatly
The drawbacks of STOs
Malta’s Security Offerings
- The line of business specific for the business.
- The financial dynamics of the business.
- The structure and mechanisms of the tokens.
- The ownership of tokens, obligations and claims from ownership
- Description of rights.
Raise capital for your venture by registering an ICO. Let us guide you through the entire process from assessing your tokenomic model, creating smart contracts, legal document requirements, marketing and tax planning.
Let us guide you through launching your STO and help you getting started with issuing security tokens backed by a real world assets. Digitize your business by using the blockchain to raise capital for your business.
Crypto Exchange Registration
A cryptocurrency exchange has the toughest requirements from the VFA services regulated in Malta. When holding clients money, VFA’s and cryptographic keys the regulation takes great care of protecting users. Let us guide you through the complete registration of registering your cryptocurrency exchange.
VFA Agent Services
The VFA agent is central in conducting crypto and blockchain related business in Malta. The agent is the bridge between your business and the authorities. Our experience as VFA agent will guide you through the fit and proper tests, financial instruments tests and ensure your business remains compliant.
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