Are STO’s the new ICO?

In an age where initial coin offerings are no longer a viable means for securing capital, many companies are now adopting more financially traditional ways of getting capital through the door to fund the development of potential products and ideas.

Security Token Offerings (STO’s) are the more responsible cousin of the ICO (Initial Coin Offering), in that they are really backed by discernible means such as company assets, profits, or revenue. By utilizing this method companies can allow potential investors to purchase tokens which then can be sold, traded, or held. By providing such credibility the STO model has gained popularity among companies looking to attract investors in a more trustworthy manner.

On the investor side of things, the approachability factor of an STO is much higher than that of an ICO, which will likely translate into a more stable flow of investor money into the crypto space as a whole.

According to Polymath any STO’s that are launched on their network will see companies guided through the often confusing and highly complex process of becoming completely KYC and AML compliant.

As the push towards more transparency via regulation continues in the crypto space, this could be a good thing overall. More trust and less risk mean more investors can enter the crypto space as companies become more compliant, translating into more growth as a whole.

STO’s then may be promising for potential growth, but come with a cost, that cost being decentralization. Being fully compliant with regulations means playing by a different set of rules, rules that are not defined by the companies themselves, but by those of the regulatory bodies which define said rules and preside over the execution of them. By effectively bypassing decentralization STO’s suddenly seem to be more appropriately home in the centralized financial world more so than that of the crypto space.

Whether you are a supporter of decentralization or not, STO’s offer yet another methodology in the continuing evolution and understanding of the crypto space.