According to the Node Blockchains Inc. study, STOs hold a better potential for fundraising, as the tokens investors receive actually represent stakes in the company and its assets. This differs from ICOs, where investors receive tokens that are essentially useless until the project makes good on what it has promised.

As explained in the study, an STO is a:

Financial security issued in the form of a digital asset; which typically represent ownership rights in an underlying company and/or its assets. This is distinctly different than the aforementioned ICOs, which were ‘Utility Tokens’ or digital tokens that provided access to a project’s future product/service with no tangible claim to an asset or equity ownership.”