There are a lot of scammers in this market whose activity is aimed at their enrichment. In December 2019, the projects collected 75 thousand dollars, bringing colossal losses and frustration to their investors. That led to the necessity of active startup regulation.
Most likely, the ICO will still be used by companies with a loyal community that rely on the investment of their user base and not on institutional investors.
However, we want to discuss with you a new, seemingly more promising fundraising model, Security Token Offering and STO promotion prospects in 2020.
After removing all manifestations of scam, the startup market was presented with a sensational invention-STO. This innovative investment trend involves the issuance of digital assets in full compliance with the requirements of the securities legislation. Investments in STO provide a high degree of investor protection, lower risks for issuers and are designed for a completely different audience than ICO.
That’s why it’s irrational to talk about their competition. Promotion STO stations are likely to be competitors of the venture capital investment model. Real assets or company stocks necessarily support STO tokens, and this is where the principal protection of the investing side is manifested. A smart contract secures share rights. Only professionals can invest in STO.
STO had a lot of interest and was the reason for the discussion. The promotion of STO will require a local financial regulator license for at least one year’s time. Experts predict that by 2021 investments in tokens will be worth $10 million.
This approach to financing which offers STO implies openness and immutability of information. Investing in STO can be very diverse: real estate, equity, art, cars, and so on. The security token is actively attracting investors due to transparency, adherence to rules and regulations, and the ability to raise capital all over the world.
The promotion of STO involves the sale of security tokens explicitly and not fundraising by selling any cryptocurrency. The main interest will be the middle-class companies that are not able to bear the costs associated with the traditional placement of securities. In the cryptocurrency world, there is still room for service tokens, and STO should not be considered a replacement for the original coin offerings. With a full-fledged approach to investing, STO is entirely possible.
To invest in STO, an investor needs to comply with certain items. For example, he/she must have net capital of $1 million, or the company’s net assets must be at least $5 million. If we are talking about investing in STO, then the investor will want more than that from ICO in 2016 and 2017. It is not enough to come to the market with vague ideas.
Financial supporters who are serious about their money expect that there will be a serious argument for maintaining the Security Token Offering market. The promotion of STO tokens tied to real assets, starting with goods and ending with stocks, will be able to provide owners with real value that will not be vulnerable to market conditions and volatility.
STO promotion is a new phenomenon in the cryptocurrency market. At the moment, there is a lessening of people’s interest in investing in new blockchain projects. It’s predicted that the overall decline in the cryptocurrency market will not last long. Therefore, optimism and confidence in the seriousness and durability of STO remain. This advanced investment model will help create a safer and more equitable decentralized economy in the future.