Differences that exist between ICO and STO

The Initial Currency Offers known as ICO have gained much attention during the last year as an ideal collective financing or Crowdfunding solution. However, there is a new Crowdfunding solution called Security Token Offer / Values ​​or STO (Security Token Offering).

Differences between ICO and STO

You might think that both are very different but in reality they are very similar. However, have a better understanding about what an STO is, we must first understand that it is an ICO. Buyers receive digital chips or tokens. Unfortunately, ICOs are not regulated in their vast majority, which puts investors at risk.

Many investors focused on blockchain and cryptocurrency opportunities have lost money by investing in fraudulent ICOs created by scammers with the goal of earning fast and easy money. These, plus the lack of regulated supervision, are the reasons why the ICOs have received so much opposition from the regulatory bodies. An STO is a token offer similar to an ICO, but the main difference is that STOs are regulated.

Closing the gap between Crowdfunding and blockchain regulation

Differences that exist between ICO and STO

STOs are registered in the stock exchange and securities commission, better known as SEC (Securities and Exchange Commission), and these take advantage of exemptions from securities such as Regulation A +, therefore, have many similarities with stocks. For example, tokens issued by STOs give investors some rights over the firm or organization that issues them.

Registration in the SEC is one of the ways in which STOs promise to offer more security to the investor. This is because registration with the regulator discourages scammers, allowing only those projects that are legitimate and serious to pursue their goal. The registration and the projects has the same process of registering the Initial Public Offers and this is not only a positive step for investors, but it should also eliminate the government’s concerns.

Market experts have great confidence in STOs and believe that market capitalization will be more than $ 10 billion by 2020. In comparison, ICOs have raised just $ 4 billion so far. The ICOs may have dominated the Crowdfunding market in 2017, but this year the STO concept is expected to take off in a big way, providing investors with safe investment opportunities. Many believe that this could be the best solution for Crowdfunding through the market of cryptocurrencies.

The ICO idea was launched by a blockchain initiative called Polymath directed by Trevor Koverko. The concept is expected to gain ground rapidly as the Crowdfunding market has been looking for a better solution and STOs avoid the problems associated with ICOs. It also highlights the current trend in which regulators have been working with companies in the blockchain cryptocurrency market to create solutions that generate more order.

In conclusion, crowdfunding is about to be much better courtesy of a more secure and regulated approach that will be offered through STOs.


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