Security token offerings (STOs) appear to be the cryptocurrency world’s next hot topic, writes Bloomberg. Following the sudden price decrease of ICOs, as well as regulators requiring issuers to register their activities as securities offerings, many started looking toward different methods of cryptocurrency investments.
At first glance, STO investments function in much the same way as cryptocurrencies, except for one significant factor—price volatility. Security tokens are tied to assets like real estate, debt, or company shares. Due to their nature, they are also subject to securities laws, which allows their limited issuance to accredited investors. Before going forward with the investment, the interested individual needs to certify their financial status.
While STOs are not yet available on most of the well-known cryptocurrency exchanges, the trend has inspired an influx of brand new platforms, including tZero, Polymath, and Securitize dedicated to the trade. As noted by Bloomberg, the relatively new venture could prove hazardous for investors with potential schemes hidden in a trendy new package.