The direction of startup financing is shifting from initial coin offerings (ICO) to the security token offerings (STO). Liquefy founder Adrian Lai said at the Hong Kong Blockchain Summit 2018 that companies must clearly understand what a security token is before considering security tokens offerings.
Security tokens are digital securities, not new things, but it’s a new way to represent stock certificates. Holding a token would be equivalent to a shareholder holding stock in a company. By verifying credentials on the blockchain, you can achieve non-tampering and ensure data security.
He continued that the biggest difference between STO and ICO is the asset support behind the token. Due to its securities nature, it is subject to the current regulation. The issuing company’s, as well as the investor’s, identity, and financial status, must undergo a rigorous KYC review to ensure compliance and legality. In the transaction, because the securities token involves the transfer of ownership, the holder has the right to refuse to sell; compared with the current utility token trading, the future will be different in the background processing of the exchange.