STO, which stands for security token offering, is a form of capital raising similar to initial public offerings (IPO) and initial coin offerings (ICO). It revolves around blockchain-based security tokens backed by real-world assets such as company shares, commodities, or real estate. Sometimes, security tokens give holders voting rights and dividends, depending on what the smart contract stipulates.
At BAF, the team pays special attention to compliance, which enables customers to conduct successful STOs. According to the company, clients can tokenize equity, reserve assets, and debt. The BAF STO Fundraising Dashboard features control panels for the token issuer, regulator, and investor, allowing users to monitor every aspect of the token, such as voting rights, dividends, and secondary market transactions.
BAF also provides support in promoting STOs and ensures the security tokens become tradeable on secondary markets. The system allows parties to make certain that only accredited investors can trade the tokens.
BAF sales director James Harper commented:
“Governments have come to an understanding that the only way to control a market disrupted by cryptocurrency fundraising and blockchain development projects is to allow a mechanism with similar goals but something that they can regulate. STOs will become the mainstream way companies raise funds from the public in less than a decade.”
With enthusiasm for ICOs fading, interest in security tokens is growing. However, retail investors do not currently have access to many potentially profitable STOs due to regulations. To address growing demand for a security token-oriented framework, Securrency launched the CAT-20 and CAT-721 protocols, which ensure the tokens are compliant with the existing laws.