Why involving in Security Token Platform Development now is more important than ever
Despite the economic downturn, cryptocurrencies continue to reach new heights with every passing day. It has made its presence felt in sectors like trading, marketing, investment, and even the functioning of government agencies. Security Token Offering (STO) is the latest buzz word in the growing crypto world. Investors in an STO get access to profit sharing, equity stake, and voting rights. The top STO’s making waves currently in the market are Polymath, BlockSafe, DigiShares, CityBlockCapital, and Swarm fund.
Understanding the meaning of an STO
Interested investors will be issued crypto coins or tokens in exchange for money for making their investment. They will have complete ownership of the token recorded on the immutable blockchain network. Security tokens can be issued for shares, stocks, venture capital funds, real estate, bonds, private equity, and revenue participation notes. They hold a lot of value as the financial instruments are tokenized. They cannot be traded on regular token exchanges. Only those exchanges who have onboarded a huge number of investors and listed a lot of tokens can issue STO’s on their platform.
The important components of an STO
- Issuance platform — It helps in making the issue and distribution of tokens easy and smooth.
- A well-defined blockchain protocol — Either own blockchain platforms or Ethereum can be used for issuing the security tokens to investors in the market.
- A smart contract — It acts as a self-executing program for the blockchain protocol and lays down the terms and conditions to be fulfilled for the issued token. It assists in the automation of the operations of a firm.
The general STO services offered by firms in the industry
- Creating different types of security tokens such as equity, debt, and reserve-asset-backed tokens.
- Organizing fundraising campaigns in different parts of the globe to attract a wide variety of investors.
- Formation of a required entity structure such as a Special Purpose Vehicle (SPV) and incorporating it for a glitch-free issue of tokens.
- Undertaking a complete audit of the STO website, owner’s manual, and marketing materials before the official launch of the token in the market.
- Preparing a financial model and technical feasibility report for the project.
The growth in the STO industry so far
STO’s emerged three years ago in 2017. A lot of infrastructures have been built for developing Alternative Trading Systems (ATS) for the trading of private security tokens. Tokenization of securities offers a plethora of benefits in the form of fractional ownership, low barriers to entry, an increase in liquidity, greater pricing efficiency, reduced issuance costs, and cost-effective fundraising.
The technology has also grown by many leaps and bounds for regulating digital assets. Security Token Platform Development has also given stiff competition to traditional methods of fundraising such as venture capital financing and private equity for companies.
Some of the leading Security Token Platform Development companies functioning in the market are
- Tokeny — Based in Luxembourg, it acts as an end-to-end platform for compliance. It creates institutional-grade security allowing the sale and management of tokens to investors.
- Securitize — It provides full-stack technology services. They have specialized tools available for both issuers and investors in the market.
- Vo1t — It is the top-notch custodian of blockchain assets in the world. With an innovative system and best cybersecurity practices, they provide a secure cold-storage vault for investors to store their assets and funds safely.
- Token market — They act as a repository platform for past, present, and future STO’s in the industry with detailed reviews and ratings of each project.
- Rialto trading — It caters to the fixed income market by delivering customized trading tools. They provide different avenues for sourcing sufficient liquidity which can be used for either single assets or multiple assets simultaneously.
The future in store for Security Token Platform Development
Many believe that STO’s are here to stay in the long run for the booming crypto landscape and for supporting the financial market. Institutional-grade assets being tokenized will accelerate the growth of STO’s in the future. STO’s are catering more to big technology companies, asset management firms, and investment banks. Since they are backed by trusted financial service providers, adequate liquidity is created ensuring a strong foundation for the issue of tokens to the investors. STO’s help in owning assets easily by being inexpensive and cutting out the role of an intermediary. STO’s are expected to grow to a whopping $10 trillion in the next two years ensuring a huge market adoption.
