STO - Security Token Offering, it is completely a crypto crowdfunding model which replaced the need for ICO. Launching an STO is not so simple as Like ICO. In Initial coin offering concept, you will create tokens, publish your white paper, deploy your website, Market your token and will collect funds for the tokens you sold. Whereas in STO, you'll do the same, but here you should create security tokens instead of utility tokens. You must give security to the investors you get to connect with. Most importantly you should do all these things by underlying the SEC rules and native government rules. Because this innovative crowdfunding model involves with security tokens that are packed with existing real-world assets. So we'll discuss every detail of launching an STO in brief below.
At first, let's find out what are the major things you must do before launching an STO?
1. Understand The Legal Compliance
Every country has a set of rules and regulations in buy, sell, fundraising, investment, and Security issuance processes. Most of the countries like India are having cut-throat restrictions to sell, buy or invest in crypto tokens/ cryptocurrencies. So it is very important to find out whether your country can allow you to launch STO.
For global understanding let us explain this concept based on US federal security regulations and legal compliances.
There are four major regulations In US, to launch your STO.
This regulation avoids an STO to be registered with SEC, But instead, the token issuer must fill the Form D after selling the security Tokens. The issuer can obtain legal documents from the investors via the section 506c, whereas the solicitation should prove that the investor is accredited and all the information provided must be exempt from misleading/false statements.
This let the issuer of STO to sell security tokens which are approved SEC. Here Non-accredited investors can participate whereas the sum of capital funds raising will be up to $50 million. When compared to other Regulation A is more expensive.
This regulation occurs when launching an STO outside of US. Whereas the issuer must comply all the security regulations, of the native country.
2. Derive a Well Cleared STO Business Plan
After understanding the basic regulations you must write down a smart STO Business Plan, In that business plan, you must cover to whom you are going to sell your tokens (i.e) Target audience. And how much capital you are going to raise through STO.
3. Get Proper Consulting and Development Services From STO Company
As we said above STO needs a lot of regulatory claims and should have legal compliance issues in order to properly launch it. So, Getting connected with an STO development company will make it easier for the issuer to properly filter out the possibilities to launch STO.
Blockchain development company can alone create security tokens, so it is better to find out an STO development company like bitdeal to create your security tokens.