Due to the miserable failure of the most ICOs, they are now but a thing of the past. But people's lack of trust in ICOs created a vacuum for a fundraising method for blockchain projects. This gave rise to Security Token Offerings a.k.a. STOs.
What is STO?
Security Token Offerings are similar to ICOS, where investors can directly invest in the project in return for a token startup. You can find many companies that offer tokenization of real estate or other assets like stocks, bonds, fiat, etc.
This is the opposite of ICO tokens or coins, where most of them lost all their value and investors left deep losses. STO is a means to prevent investors from falling prey to fraudulent business activities.
Due to the fact that the security token offerings are classified as securities, they are also subject to the securities regulations of the country they are launched in the countries and their investors.
Also, the security token and startups offering them very reliable because they are in accordance with the laws regulations set by the financial authorities in the country they belong to.
Security token purchased by investors for offering security tokens are stored in the wallet cryptocurrency and information regarding the ownership of the security token is listed on the blockchain.
What advantage STO Got?
STO brings a new dawn for blockchain startups to raise funds after ICOS failed to address the cause. Companies that filed for STO automatically declare that they are in accordance with the regulations and thus attract more investors to invest in its token.