...STOs or Security Token Offerings are a category of tokens where the shared assets are considered financial securities since inception. In the early days, many ICOs tried to bypass the SEC under the pretext that their tokens are actually Utility tokens and not subject to SEC regulations. With Security tokens, however, the cat and mouse game between ICOs and the SEC is finally over, as the blockchain projects seek to raise funds in SEC-approved ways.
Of course, there are consequences to issuing Security tokens – unlike Utility tokens, which can be sold to anyone and traded on unregulated exchanges, Security tokens are actually backed by something tangible, such as the assets, profits, or revenue of the company. They also require diligent KYC, AML and accredited investors checks.
Etherparty Smart Contracts Inc. has offered Rocket, a tool that gained popularity for its ability to help startups launch and track a token generation event without needing a development team. Rocket is already being used by over 600 projects, according to the Canadian blockchain company. Now, Etherparty is about to launch Rocket version 2.0, which is expected to enable both utility and security tokens.
Rocket 2.0 also incorporates automated compliance software, so companies looking to enter legally fraught spaces like the securities market can do so with peace of mind. The platform can quickly standardize contract terms according to a region, and if there are issues which do not fit the local laws, Rocket can easily point them out so they can be addressed most efficiently...