Why Security Tokens are Great
If you don’t already know what a security token is, it is crypto token that derives its value from an external, tradable asset becomes subject to federal securities regulations.
Now, why are security tokens so great?
Under regulatory frameworks such as Regulation A+, Regulation D, Regulation S, and Regulation Crowdfunding, security tokens are significantly cheaper and faster conducting an initial public offering than utility tokens, and it can significantly reduce legal risk.
Security laws have been changing to fit the era for decades. Security tokens would inherit a wealth of principal rule that would highlight token buyer rights, protections and expectations. Additionally, they would clarify duties and obligations of the issuer.
If an company acknowledges that its token is a security, then it can be acknowledged as an investment. The company could provide token purchasers with benefits like dividends, profit shares and voting rights which it would normally would be avoided if it wanted to avoid the label of security. A security token could still feature significant “utility” qualities; it could still be used in native transactions in an organization’s service or product.
Moreover, the company can be more transparent with buyers about token economics and how they intend to increase token value.