In many ways, security tokens are the antithesis of initial coin offerings. They are regulated, structured, and can sometimes be costly to create. While these might seem like drawbacks to some, they provide big benefits to investors, as well as the project leads.
In this guide we go over the difference between STOs and ICOs, as well as their core systems and benefits.
A crypto token that passes the Howey Test is deemed a security token. These usually derive their value from an external, tradable asset. Because the tokens are deemed a security, they are subject to federal securities and regulations. If the ICO doesn’t follow the regulations, then they could be subject to penalties.
However, if all the regulations are properly met, then these tokens have immensely powerful use-cases.