Security token offering (STO)

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What is

Security token offering (STO)


The Security Token Offering (STO) is a digital token backed by blockchain technology that represents a stake in STO assets, enabling digital fundraising while still complying with government regulations. Security tokens require extensive regulations. STOs are digital representations of real-world assets such as bonds, stocks, or gold. As a result, security token offering services enable asset tokens for many businesses.

Security tokens are similar to certificates issued for stocks. In the case of stocks, ownership information is entered into the document as an official certificate of ownership. For STO, the information will be recorded for security tokens, but the main difference is that the STO is saved in the blockchain and represented by a token.

security token offering
A security token offering (or STO) is a regulated way to raise funds through blockchains that keeps investors protected.

The Security Token Offering (STO) and the Initial Coin Offering (ICO)

Therefore, there is no regular token exchange. However, it is similar to an ICO (Initial Coin Offering) as it is a fungible token with monetary value.

An STO is similar to ICOs. But unlike the latter, investors' protection is ensured. Indeed, STOs must meet regulatory requirements. In the past, some unregulated ICOs were fraudulent and brought issues to the market. Regulations were implemented to tackle this. In summary, a security token offering (or STO) is a regulated way to raise funds through blockchains.

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About Scorechain

Scorechain is a Risk-AML software provider for cryptocurrencies and digital assets. As a leader in crypto compliance, the Luxembourgish company has helped over 200 customers in 40 countries since 2015, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets, customers onboarding, audit and law firms, and some LEAs.

Scorechain solution supports Bitcoin analytics with Lightning Network detection, Ethereum analytics with all ERC20 tokens and stablecoins, Litecoin, Bitcoin Cash, Dash, XRP Ledger, Tezos, and Tron with TRC10 and TRC20 tokens. The software can de-anonymize the Blockchain data and connect with sanction lists to provide risk scoring on digital assets, transactions, addresses, and entities. The risk assessment methodology applied by Scorechain has been verified and can be fully customizable to fit all jurisdictions. 300+ risk-AML scenarios are provided to its customers with a wide range of risk indicators so businesses under the scope of the crypto regulation can report suspicious activity to authorities with enhanced due diligence.