What are security tokens?

The rapid expansion of blockchain technology and cryptocurrencies usage over the past several years is a clear indicator for their wide popularization. More and more institutional investors, regular consumers and different industries, including the large retail sector, have started relying on cryptocurrencies as a primary payment method.

The Initial Coin Offerings (ICOs), which are the crypto-space equivalent of IPOs had their place under the sun until recently. Security Token Offerings (STOs) are currently slowly overtaking the scene with the added layer of security that is being offered to token holders, minimizing the chance for scams.

Security tokens may represent shares of a company, bonds, stocks, or may offer another form of incentives to the buyer. Furthermore, they are generally traded on financial markets and exchanges along with all ordinary tokens. Investors are often granted with certain rights, voting options, shares of the issuing company and can even make the token holders part of the Executive/Management Board. 

Securities are a great way of becoming a shareholder, without the need for going through the hectic process of physically purchasing the organization.

Security tokens, unlike other crypto products, fall under various regulatory frameworks. Regulations ensure that the contracts between investors and issuing companies are law-compliant, just like traditional securities. FINMA, the Swiss financial market regulator, is overseeing all trading activities in Switzerland. Blueshare is also falling under the supervision of the Switzerland-based regulator for the launch of the scheduled for 6th May 2019 STO.

Retail and institutional investors can purchase security tokens from around the world, at any given time, eliminating the need for a middleman (bank or broker). The market is currently in its “bullish” phase, opening up the market for new investors. The asset-backed STO tokens, with regulations in place, are set to attract new investors, especially with the flexibility that they provide. Through the utilization of STO tokens, issuers ensure liquidity, fast and secure market, trust in investors, and transparency.

join our telegram group