U.S. stock exchange NASDAQ explores trading market for security tokens—The block
Security Token Offering (STO)
As a means of financing, and as a method for issuers to issue tokens that trade on the blockchain, unlike ICOs (Initial Coin Offerings), Security Token Offerings (STOs) are considered to be designed in compliance with existing U.S. securities laws.
Since last year, the ICO market has seen hundreds of projects raise billions of dollars and gain popularity, while this market has also drawn strict scrutiny from regulators such as the U.S. Securities and Exchange Commission (SEC) due to widespread scams, even as strong startups can raise large sums quickly.
Unlike traditional ICOs, where the owner accesses utility tokens that grant access to blockchain-based products or services, security tokens are tied to real assets such as companies, real estate, or other tangible assets. STOs function similarly to a blockchain-based version of an initial public offering (IPO), with issued tokens backed by asset value (such as shares).
