Utility Tokens, Security Tokens… What’s All That About?
What Indiegogo did, raised many questions. First of all, what is a security token and then what are its main advantages?
Unlike utility ICO tokens, which (at least purportedly) serve as coupons for a product or service, security tokens represent investment contracts. In this case, each Aspen Coin represents a share in a single-asset real estate investment trust (REIT) that holds the $18 million in St. Regis Aspen equity made available through the STO/ICO. Since securities offerings are regulated by the SEC, the sale was restricted to accredited buyers.
Security token is a new financial instrument that has emerged basically because of two needs: stronger regulation and the separation of speculation from the utility. In simpler terms, security tokens are cryptographic tokens that pay dividends, share profits, pay interest or invest in other tokens or assets to generate profits for the token holders. This takes care of the liquidity issues.
Previously, with traditional paper backed assets like company’s shares or bonds or real estate, liquidity was a problem. However, cryptographic representation of all these things in a token form, can take care of that issue.
Since its inception, ‘Security Tokens’ has been a matter of big debate and controversy in the crypto market. Currently, Security Token Offerings make a very small percentage in the crypto funding activities. However, some experts believe that Security Tokens will help to trigger institutional investor participation in the future.
Read full guide: https://www.coinspeaker.com/guides/security-token-offering-sto-complete-guide/
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