Now only few projects offers to sell security tokens. Many investors do not know what are the security tokens, their advantages and their difference from utility tokens.
Well the information is out there. And I have spent a lot of time on this ANN thread explaining it. All the have to do is take the time to read and do some research. TWO things key before making any investment decisions. That is investment 101.
But here is more if they would like and it has links at the end. But it is long so people will have to take 10 to 20 minutes to read it. My impression so far is that people won't take the time to read this. But you need to be informed if you want to invest. You should see what Investment Funds ask for in information and they read it all. These are people who manage billions of dollars. Guess then know what they are doing because they are INFORMED.
WHAT IS A STO?
Security Token Offering
Similar to an initial coin offering (ICO) an investor is issued with a crypto coin or token representing their investment. But unlike an ICO, a security token represents an investment contract into an underlying investment asset. In Adsana’s STO, we are tokenizing shares of stock in the company. Others can tokenize assets or debt?
STOs are seen as lower risk than ICO’s because the securities laws that security tokens have to comply with, will often enforce transparency and accountability. A security token will also be backed by a real-world asset, which makes it a lot easier to assess whether or not the token is priced fairly in relation to the underlying asset.
Each AdSana security token is attached and backed by one share of Class B Common Voting Stock in the Ad Sana Corporation. The SANA tokens are securities for purposes of U.S. federal and state securities laws. And have voting rights as token/shareholders. And have the same rights to dividends if paid out and a proportionately share of the profits if the company is sold.
Main benefit:
With a private company if someone invests into the private company via a stock purchase there is not much of a market to sell them. In fact, they are often restricted. And those investors are at the mercy of the controlling owners of the private company and whatever exit strategy that is offered.
Only once a company goes public ,either through an IPO which is very expensive or thru a reverse merger, again close to a cost of $500,000, or thru a DPO (Direct Public Offering) which still is close to $125,000, can the stocks be sold on the open market via a stock exchange.
That is not the fact with Security Tokens. Even if the company is private, the security tokens create a public market for the security tokens to be sold. You do not have to be a public company to have a market for the tokens. The security tokens can be sold on security token exchanges.
There are even government regulated security token exchanges. Jamaica and Barbados are starting their regulation exchanges. So is Germany.
Plus, there are non-governmental security token exchanges. At the end of this document are links to two good articles talking about some of the top privately-owned security token exchanges. Second story is a complete list of privately-run security token exchanges.
AdSana is offering the SANA tokens to U.S. investors in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), set forth in Rule 506(c) of Regulation D under the Securities Act. Under Rule 506(c), the Company can only sell the SANA tokens to U.S. investors who are “accredited investors” as defined in Rule 501 of Regulation D. The Company is required to verify the status of each U.S. investor as an “accredited investor.”
As a result, each U.S. investor who subscribes for SANA tokens will be required to provide the Company with additional documentation that establishes that the investor is an accredited investor.
The Company is offering the SANA tokens to certain non-U.S. investors in offshore transactions in reliance on Regulation S under the Securities Act. Each non-U.S. investor will be required to confirm that such investor is a not a “U.S. person” for purposes of Regulation S and that such investor was offered the SANA tokens outside of the United States and submitted its subscription documents to the Principal Placement Agent from outside the United States. Non-U.S. investors under the Regulation S are not required to be “Accredited Investors”.
All investors US or non-US will have to go through a KYC (Know Your Customer) check and an AML (Anti Money Laundering) check. Adsana can do this themselves or they can hire third party companies to perform the process.
Resale of the SANA tokens and SANA token
Under Rule 144 of the Securities Act, investors in the Offering who are not affiliates of the Company may resell their SANA tokens without restriction in the United States after they have held the SANA tokens for a combined period of one year (commencing on the date that the investor originally purchased the SANA tokens.
Investors in the Offering who are non-U.S. persons outside the United States and have purchase the SANA tokens under the rules of Regulation S of a 506(c) offering within the Securities Act may resell their SANA tokens without restriction after they have held the SANA tokens for a combined period of 90 days (commencing on the date that the investor originally purchased the SANA tokens.
US Investors may also be able to resell the SANA tokens after the same 90 day rule above if, and only if, they sell the SANA tokens to non-U.S. persons outside the United States after the investors purchase the SANA tokens in reliance on Rule 904 of Regulation S under the Securities Act.
On the secondary market, after the STO is completed, and the SANA tokens are listed on a security token exchange, there are no selling or purchasing restrictions and investor can buy or sell the security tokens at will just like buying or selling stocks on an exchange.
What this means for liquidity for security tokens of a private company once on a security token exchange is that, the tokens are fully liquid as like stocks of a public company. Yet the company does not have to be public nor be incumbered by the time and cost the public companies have in quarterly and annual filings and audits.
That said if a private company after the STO ends up with 2000 or more investors then the SEC will declare them to be a public company and will have to take on all the time and cost of the filings and audits of a public company. Most private companies in a security token offering, try their best to NOT go over 1999 investors.
For more on STO’s check out this article
https://medium.com/swlh/what-are-security-tokens-9ce452633c51For more on private security token exchanges.
https://coinsutra.com/top-security-token-exchanges/https://token.security/stn/article/directory/security-token-exchanges-the-complete-list/
