Security Token Offerings: Top 5 Answers To Your Burning STO Questions


Security Token Offerings (STOs) are a hot topic in the cryptocurrency industry. A developer conference held by NEO featured discussion concerning STOs.

The discussion was led by a panel, which included top figures in the industry such as NEO global development manager Tamar Salant, Liquefy top product officer Drey Ng, Republic managing director Byran Myint, and CEO of Jinse Finance Angela Tong.

Here are five major points discussed by the panel concerning STOs.

1. A Global Challenge

First, though ICOs started off with a lack of regulation and things seemed to still run, STOs are different – they require regulation. STOs can be used as a funding tokenization mechanism, and because they can be treated as securities, they need to be regulated as such as well.

Those who purchase STOs need to abide by the token regulations of not only the country that they are in, but also the jurisdiction in which the token is being sold. This can create a bit of a mess, especially if the laws are different.

2. The Influence of Large Jurisdictions

Second, large jurisdictions may have more influence on STOs than smaller ones. For example, if the United States Securities and Exchange Commission were to come out with a regulation or position concerning STOs, there is a big chance that smaller jurisdictions will follow suit.

The big hope is that the SEC will approve STOs, which makes it easier for other jurisdictions tow ork within the framework as well.

3. STOs Do Not Replace ICOs

Third, there are those who believe that STOs will replace ICOs, but such a position may be wrong. Salant discussed during the panel that:

“thinking the STO will revive the ICO market is a misunderstanding of the concept of what a security token is.”

NEO and its developer seem to believe that STOs are not supposed to be used as a primary fundraising mechanism, but as an integral element of the ecosystem. Myint added that STOs are about providing a:

“quicker path to liquidity and allows you to fractionalize . . . and allow more people to own things that are typically liquid.”

Those who use STOs solely as a fundraising mechanism means that users are going to be missing out on their full potential, which includes creating ownership opportunities.

4. Technology Without a Legal Solution

Though STOs seem to be far developed, they are also in a difficult position due to the lack of understanding concerning the legal repercussions.

This type of dilemma is known as the Collingridge Dilemma, which essentially takes the position that it is impossible to know the impact of technology until is adopted and used. As Myint stated,

“what makes it hard is the laws and government move kind of slowly and calculated. That’s the main hurdle we face. We don’t have a solution.”

5. Education and Learning is Key

As with everything, education and learning is key. Tong stated:

“in China we can’t mention any STOs. We can only report about the situation in other countries. We want to provide knowledge about ICOs.”

Ng continued, “people are still confused about it. So I feel there is a lot of education to be done.” Even though STOs may provide opportunity and investment for many, there is still a lack of education. Investment requires knowledge and understanding, which will take time.

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