From IPO/ICO to STO

[r1s2g3]

Whenever the term investment come into discussion it is never complete until you are suggessted about buying stocks. Compare to the interests earned in the money , good stocks seems to outperform them. One of the method to acquire stock is to invest in IPO (Initial Public offering). In IPO , company offer its share to public in attempt to raise money for the company. Companies that raise funds from the route of IPO become public companies and they need to follow various govenment rules or more precisely they get regulated by the Securities board of their country.

With Bitcoin/Crypto currency come into picture,we saw a new kind of public fund raising that everybody in this forum knows about it known as ICO. Problem with ICO is that they are not regulated by any goverment agency, they are collecting public money even without disclosing their real identity.Most of these ICO scammed and forced government either to deem ICOs as illegal or find a way to regulate the ICOs.

In USA, SEC put definitive guidelines for running an ICO and many ICO classified as securities. Since securities cannot be offered as ICO a new concenpt of STO (Security Token Offering) come into picture. So when you are participating in a STO , you will have some sense of security that it is registered and regulated by government. (But still you need to check if the project is scam or not.)

Now coming to the end point how STO is different from IPO?
Investing in STO is much easier that IPO. STO will be a digital asset and being a digital asset it will be easier to invest and transfer them (as compared to holding the paper shares).
These digital assets can be marketed very easily wherever permitted by law without involving the traditional stock brokers and their commission  fees. Same will be applicable when you will be trying to disinvest.

PS: I am not giving any financial advice but just suggesting investing in STO is easier than IPO.

[Yeahpro]

Regulatory barriers differentiates them.
Utility tokens are not considered 'investments' and holders of such tokens/coins do not hold shares in the company or establishment, but can use their tokena for the utility the projects offers on its platform. Lots of projects without platforms and no utility were crowdfunding through ICOs. This created lots of distrust in the industry.

The advent of STOs would make crowd funding more seamless and would clearly define; investors and contributors. And would be in conformity will laws and regulations.

[Jet Cash]

I'm trying a slight variation on this with my Assured Coin. You deposit an asset into a pool, and your receive tokens to the value of the deposit. The value of the tokens is based on the aggregate value of the pool. Obviously asset deposits have to be agreed by the pool members to avoid the dumping of rubbish. Tokens are born or burnt based on the asset deposit/withdrawal activity.

[rat03gopoh]

However, the road to cheating will certainly be found especially by scammer projects. If the STO is held it should only involve local people to participate. I thought it would be easier to examine the legality of the project if it had actually been under the control of the government.

Document forgery is still common and it is not possible to clarify it if investors come from outside the region.

Problem with ICO is that they are not regulated by any goverment agency, they are collecting public money even without disclosing their real identity.Most of these ICO scammed and forced government either to deem ICOs as illegal or find a way to regulate the ICOs.

Speaking of the ICO, some of them applied KYC which might be hated even more by investors outside their country because of course besides the identity of the project also if the project was about a service that finally only ran within that country. Is KYC appropriate to be eliminated in the ICO?

[manfredmann]

That is somehow a good thing that happen in cryptocurrency OP. STO is not really bad at all this will help regulate the scam activities of the people running a project. STO would be better than ICO. An investor will just going to validate the project for there are still people who run scam activities probably will use STO even if it weren't just to scam investors. For sure, there could be something from the team that could pinpoint the legit registration of the STO. THis is the best thing that happen now and hopefully this STO will be eventually recognized and apply here in the forum. Thanks for this thread OP. Hope to see some support of this claim. An article may do.

[Hivalley]

STO provides far more security to its investors than what ICOs affords them and that way it happens to be a more safer option to invest in after the investor has done his or her homework in making sure the project is legit and in conformation with all governments regulations required of it.
The digital assets aspect of STOs makes them even more unique,and more accessible for investors in countries where they are accepted.

[Onuohakk]

Among the three ipo,ico and sto. Sto is the one that has not been completely tested.

Despite the poor conditions of initial coin offerings we would be wrong to say ico had not been beneficial to the cryptocurrency space a whole lot of amazing project where born out of ico.
Although I see alot of prospective in security token offering I am still sceptical about it been under regulation

[Pmalek]

The problem is that now the fake projects can and will start to claim that they are an STO, fully regulated and compliant to SEC protocols, make a legit looking website, create a fake team, compliance documents and continue collecting money until proven to be a scam.     

[elda34b]

The problem is that now the fake projects can and will start to claim that they are an STO, fully regulated and compliant to SEC protocols, make a legit looking website, create a fake team, compliance documents and continue collecting money until proven to be a scam.     

I'm sure this issues can be prevented if SEC (or other regulatory bodies) make a database of approved STO (like Estonian FIU database). Let's say, to run an STO, you need to provide ID, etc. They'll need to provide their 'license' to run STO from SEC, so investors can do their own diligence. But if someone still got scammed, then I'm not sure it is their fault or SEC faults.

[CryptopreneurBrainboss]

I'm sure this issues can be prevented if SEC (or other regulatory bodies) make a database of approved STO (like Estonian FIU database). Let's say, to run an STO, you need to provide ID, etc. They'll need to provide their 'license' to run STO from SEC, so investors can do their own diligence.

With this solution we're handing power back to the very  few making the system more centralize which goes against the idea behind the blockchain technology. I believe security token offering won't succeed in the cryptocurrency community as initial coin offering did.  What made ICO fun and interesting was that it didn't require any government approve but with STO well lets test it and see how it goes.

[kingpin4321]

I believe security token offering won't succeed in the cryptocurrency community as initial coin offering did.

I agree with you that initial coin offering initially was a big success I think this success was also part of its down fall because many scammer got interested and so a whole lot of opportunities in it.
The cryptocurrency world is quite a bit developed as to how it was earlier and more people are getting involved and I think a bit of security in the token offering is a welcomed idea

[Harkorede]

With this solution we're handing power back to the very  few making the system more centralize which goes against the idea behind the blockchain technology. I believe security token offering won't succeed in the cryptocurrency community as initial coin offering did.  What made ICO fun and interesting was that it didn't require any government approve but with STO well lets test it and see how it goes.

Although, I partially agree with your view about making crypto more centralized with STOs, but I guess a lot of things needs to be called to order, STOs wouldn't do more harm to crypto space than Scam ICOs/IPOs have been doing these past years. And if a group of people that would be willing to get funds and identity documents from strangers to run their project are being made to undergo regulation, I don't see anything out of place in that.

[r1s2g3]

I'm trying a slight variation on this with my Assured Coin. You deposit an asset into a pool, and your receive tokens to the value of the deposit. The value of the tokens is based on the aggregate value of the pool. Obviously asset deposits have to be agreed by the pool members to avoid the dumping of rubbish. Tokens are born or burnt based on the asset deposit/withdrawal activity.

Until you are not opening up for public/crowd funding, I do not think any STO/ICO rule will be applied to you. Anyways these are rule currently followed in USA, UK might have some other rules.

Speaking of the ICO, some of them applied KYC which might be hated even more by investors outside their country because of course besides the identity of the project also if the project was about a service that finally only ran within that country. Is KYC appropriate to be eliminated in the ICO?

Let speak, even ICO is legit  and have known team but did not it look stupid to provide the all the hard cap amount to them without any MVP available and they have all of your money without any responsibility towards you. This is fully on trust now with no checks. Are they can be held responsible for creating a bad product or failing to create the product?

The problem is that now the fake projects can and will start to claim that they are an STO, fully regulated and compliant to SEC protocols, make a legit looking website, create a fake team, compliance documents and continue collecting money until proven to be a scam.    

Most of the ICO   either offering utility token and if they are offering security token then they exclude the US residents. Though I do not checked any STO that in US SEC website  but US SEC encourage to check in this link https://www.sec.gov/edgar/searchedgar/companysearch.html

I checked for https://www.icumulate.io/ ICO (utility token offering), they claimed that they are registered in Gibraltar but Gibraltar Financial Services Commission  replied as below.

iCumulate are not licenced or regulated by the Gibraltar Financial Services Commission.

The GFSC does not currently regulate ICOs, however, the Gibraltar Government is planning on issuing Token Regulations in future. You will be able to find more information on this in the “Token Legislation plans: press release February 2018” PDF on our website at the following URL: http://www.fsc.gi/downloads?section=19&type=0

For future reference, you can find a list of authorised DLT Providers on our website at the following URL: http://www.fsc.gi/regulated-entities/dlt-providers-38

They were late in providing the response, icumulate.io already cancelled the ICO till then and I was not able to question them.