Security Token Offering (STO) is a method of fundraising in which a company offers digital tokens to investors. These tokens represent ownership in the company and can provide dividends, voting rights, or other financial benefits.
STOs differ from Initial Coin Offerings (ICOs) in that they are subject to strict regulations and compliance requirements, similar to traditional securities offerings. This means that STOs offer more investor protection and transparency compared to ICOs.
Investors who participate in STOs are required to undergo Know Your Customer (KYC) and Anti-Money Laundering (AML) checks to ensure they comply with financial regulations. Additionally, the company issuing the tokens must adhere to securities laws in the jurisdictions where they operate.
Overall, STOs are seen as a more secure and legally compliant way for companies to raise funds through digital token offerings. They provide investors with greater confidence and protection, making them an attractive option for those looking to invest in the cryptocurrency space.
