Security Token Offering – STO – Explained

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. 

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.

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