How to Write an STO White Paper: A Step-by-Step Guide (Part I)

The cryptocommunity’s collectively rising interest in STOs is leading to an increasing demand for STO white paper writers. Due to the similarities with securities offerings, STO white papers must follow certain guidelines to stay on the right side of the law. While there are multiple ways of checking all the boxes, the following guidelines are the simplest way to achieve them.

An  STO white paper is the biggest and the most important marketing document of the product and if done wrong, can kill your product before it even begins.

Given the general absence of regulations surrounding cryptocurrency-based products, it becomes very important for the STO white paper to conform to a non-leading and non-speculative language.

Writing ICO white papers was a job prospect that gave birth to several faux writers parading as experts. You can’t blame them since the majority of the ICOs themselves were based on the same premise.

I have witnessed first-hand ICO companies offer $100 for writing an ICO white paper.

Dude! Good Luck for your $100 million ICO building a token based PaaS ecosystem. Also, skip!!

I mean, yes, there exist cheap knockoffs of the latest iPhones and the Galaxy Note devices, but do you buy them? If you cannot differentiate between a cheap knockoff and the real thing, conducting an ICO should be the least of your worries.

Thankfully, Security Token Offerings (STOs) are the worthy answers from the crypto-community to the challenge thrown by the regulatory authorities.

An STO is simply an ICO that consulted a real lawyer before proceeding with the token sale offering.

Look at Tezos with its securities class action lawsuit in the USA. While Tezos and its ridiculously named token — Tezzies might be right in spirit and intent, they quite possibly did not worry much about legal due diligence as much as they have to now.

Legal compliance is not a luxury but a requirement.

In a perfectly rational world, there would have been no need for another acronym — STO when the existing acronym — ICO encompassed both, tokenized assets, as well as, tokenized platform access.

However, we are where we are due to our decisions and actions.

Security Token Offerings are the hottest thing in the crypto-verse and another flood of cryptocurrency token offerings in the form of security tokens are just around the corner.

Another deluge of cryptocurrency writers will begin adding STO white paper development as a skill and begin offering it at $100 a piece. The problem does not lie in cheap alternatives. It lies in the potential ramifications that can arise from the usage of that cheap alternative.

Some things are expensive not due to inflation but the actual value that they represent.

My intention behind writing this article is to help white paper writers find a decent template for developing an STO white paper.

It will also benefit STO companies have some semblance of auditability when outsourcing the writing of your STO white paper to cheaper writers.

A Few Global Rules for Writing an Sto White Paper:

An STO white paper must have the following 6 sections to ensure completeness of the documentation:

While the order of these six building blocks of an STO white paper can be altered, I feel that this ordering follows a natural flow and enables the reader to see a cohesive story.

Legal Disclaimers in an STO White Paper

Also known as Forward-Looking Statements, the Legal Disclaimers are provided by a law firm/agency after a review of the complete STO white paper by them. It should include the following items:

How to Write about the Industry in an STO White Paper

Every STO addresses or ‘disrupts’ the operations of one industry or more.

For example, an STO of equity ownership belongs to the finance and investments sector.

Industry Overview is a crucial section and was often skipped by the ICOs of 2018. Investors (contributors in the case of ICOs) come from diverse backgrounds and do not know about the ins and outs of the industry. Thus, industry overview adds a wealth of information to the STO white paper for the benefit of the readers.

In this case, Industry Overview must talk about the following areas to achieve completeness:

Do keep in mind to not go over 10-12 pages while writing the industry overview section. If you go over, it will make the reader go through 10-15 minutes of reading time without even getting introduced to the project.

A good STO white paper straddles the fine line between an academic textbook and an advertisement material.

How to Write about the Product in the STO White Paper

This section should be the meatiest and the most cohesive piece of the white paper. By meatiest, it does not mean that it should have the most number of pages (for the record, it will be the Technical Architecture Section), but should be the mechanism that ties all the loose ends created during the industry overview section and present the chosen solution as the only emerging common theme in a natural manner.

For example, if you are writing a white paper for an STO that offers a solution for tokenizing a real estate plot, you will write about the constraints of the builders, buyers, and the regulatory authorities.

In the Product Description section, you must write how your solution addresses these problems. This section must be divided into the following sections to allow easy readability and provide natural reading breaks to maintain reader interest:

This completes the non-technical and non-financial side of our guide to developing a complete and cohesive STO White Paper. The details about creating the remaining sections can be found in second part of the 2-Part guide.

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