A crypto token is the most trending term and a buzzword right now in the crypto sector. People are showing interest in crypto tokens rather than crypto coins because of their popularity and benefits. Crypto tokens are classified into two main types such as security tokens and utility tokens. Comparing these two types, security tokens are mostly preferred by the majority of business-class people. There has been a lot of hype surrounding the security token offering platform in recent times. Since most of the SECs have started suffocating from utility tokens, security tokens have gained great importance in the blockchain industry. Security tokens are a new strain of cryptographic tokens, which are completely backed by real-world assets like real estate, bonds, shares, and more.
Now Let us begin with,
What is a Security Token Offering?
Security tokens are created for raising funds through the STO platform. Security token offering platform is recognized as one of the best crypto crowdfunding strategies for raising funds securely in the crypto sector. STO is currently trending in the market and many startups are creating security tokens for their projects.
Security tokens are divided into three types. They are,
- Asset-backed crypto tokens
- Equity tokens
- Debt tokens
The STO market is still in its early stages. Cryptopreneur can expect a huge growth in the security token when it is adopted by most startups and investors in the crypto market. The process of Security Token offering is similar to Initial Coin Offerings but with a few differences.
If you are new to the STO concept, then this article is dedicated to you. Being a leading STO Development company in the blockchain industry, we have drafted this article that speaks about the complete process of Security Token Offerings and the cost of launching the Security Token Offering platform for business.
Let us begin this article with…
How do Security Token Offering differ from Initial Coin Offerings?
Initial Coin Offering is one of the well-known fundraising strategies in the crypto sector which is mostly utilized by crypto startups to raise their funds for the project. In ICO, startups will issue utility types of crypto tokens for the investors for which they will get paid with Fiat currency or any other cryptocurrency. Investors or traders will buy utility tokens from the startups to attain access to a project’s service or product in the future.
For the past few years, ICOs aren’t performing much better in the crypto market. Because only a few ICO projects are showing their presence in the crypto space but some are portrayed as fake or scams. Thus, to make the approach more secure and provide trust to the investors, another crypto crowdfunding strategy called “Security Token Offerings” came into existence. STOs are far similar to IPOs but in a more digitized way implemented using Blockchain Technology.
In the case of Security Token Offerings platform, they primarily issue Security Tokens which have more power and protection to the investors of the tokens when compared to utility tokens. In ICO, there are no regulations & interference from the government. But when it comes to the STO, the startups should satisfy all the rules and conditions declared by the SEC. If you are planning to create a security token and STO platform for your business, then you should follow all the SEC guidelines and regulations. By launching a security token, you can attract crypto investors globally.
Benefits of Security Token Offering platform
Individuals embracing Security Token Offerings are enjoying the following benefits:
Fraction Ownership
Security Tokens offer(STO) fractional ownership assets to the investors. This means that the investors will have equal shares of the company or the asset that is pegged with the security token.
Automated Compliance
Security Tokens are completely regulated and the regulations for the security tokens vary with investor type, asset type, and jurisdiction, etc. The Security Token Offering platform is crafted with a high-end security system and blockchain, so it is secure and safe for investors.
Intrinsic Value
Unlike utility tokens, which represent future access to the issuing company’s products or services, security tokens represent potential interest in shares, dividends, profit sharing, voting rights, and other benefits for investors.
More Liquidity
With protection tokens allowing fractional possession and decreasing minimal investments, the cryptocurrency marketplace can witness expanded liquidity. Illiquid assets, or people who aren’t smooth to resell, can decorate their liquidity at the blockchain via means of allowing buyers to shop for smaller stakes.
Free Market Exposure
It is a painstaking task for investors to invest in US real estate or private startups. With security tokens, owners have complete responsibility worldwide. Deals can also be closed globally, with any type of investor who just has an internet connection.
Now, let us see…
How to Launch a Security Token Offering Platform?
Coming to the STO development process, here are the four primary steps involved in launching an STO platform.
Foundation Stage
Before starting a Security Token Offering, you need a solid and solid idea to attract potential investors. At this step, we recommend seeking legal advice to clarify regulations and consult experts on how to increase the value of your tokens.
In general, a token’s value is determined based on its role, purpose, and function. The role you define for the token generates a corresponding purpose. Then you can specify the function to fit your business goals. It’s important to clarify these things and fine-tune the details before the Security Token Offering platform launch.
Pre-STO Stage
Remember, the STO must be on the market before launching. This is where your marketing strategy comes into play. We also need to maximize crypto community forums and websites that list STOs and ICOs. Make sure you are getting the correct information, such as:
- your white paper
- token structure
- team credentials
- Milestone
It is also best to choose a trusted cryptocurrency exchange as a partner. Choose one that practices a high level of due diligence. This keeps scammers out of the mix and saves a lot of time and hassle. Also make sure the exchange allows the investor to comply with his KYC and AML regulations in his home country. The security token collateral value also requires a custodian. Usually this can be done by a third party with a special purpose entity or trust company. Popular custodian banks include Coinbase and Prime Trust.
With these details resolved, we can move on to tokenizing and marketing the STO. The token creation process is highly dependent on the platform you choose, so make sure you have thoroughly researched the platform.
Launching a Security Token Offering platform
The most important aspect of the STO project when conducting a public sale is the next step in the security token offering process. That is the point at which your company will ultimately offer your tokens to the wider public to raise funds.
At this point, the sales section of the website will be published. Make sure to display a team and token sale button that should be easily found on your website. Investors can register, undergo KYC and AML checks, and purchase tokens on this site. At this point, you can also enlist the help of the STO launch service.
Set up Neighborhood Help to help investors instantly. Investor support and questions should be available from our support team on social media and cryptocurrency forums. It is essential to respond to inquiries as quickly as possible as they can mean the difference between a successful token sale and a failed token sale.
Post-STO
STO Marketing
Now, you have an eye-catching STO website, your Security Token, and you can start marketing your product. Make sure you have the required funds for marketing activities as well.
Community Support
The most important factor in raising funds through the Security Token Offering platform is to support your communities. Your customers may have certain queries or issues they may be facing. It is important to support them all the time. This will increase your reliability.
How Much Does it Cost to Launch a Security Token Offering Platform?
Most crypto startups have a dream of launching a security token and raising funds through the STO website. But they have a common question in their mind – what will be the cost of launching an STO? Basically, the cost to launch an STO will be based on some essential factors. Such as
- Development of smart contract
- Complexity of project
- Features enabled in STO platform
- User and admin dashboard
- Legitimate aspect
- Testing and security review
- Size of STO development team
The above-mentioned factors will shape the Security TO development cost. We can not predict the exact STO creation cost but for launching a top-notch Security Token Offering platform, the cost of development will be around $5500 – $7000. However, the STO development cost will differ based on your business requirements and urgent needs.
Final Words
By the end of 2023, we can expect a good number of new Security Tokens launched. Besides, it will also emerge to be one of the most popular fundraising strategies in the future. Hope Security Token Offerings unlock the true value of helping startups to raise their funds instantly. All you need to do is hire a team of blockchain developers from the reputed STO Development Company in the blockchain sector. One such Security Token Offering platform development firm is ZAB Technologies.
If you want to launch a Security Token Offering platform as per your business needs at a budget-friendly price, then you can get in touch with us! We render end-to-end solutions right from ideation to STO deployment which is feasible for all types of businesses.
Our experts are readily available to assist you anytime!
