Why Security Token Offerings are Ideal for Making Investments

Security token offerings (STO) emerged when initial coin offerings were shunned in the year 2018. Demand for security token offering development companies has increased because security tokens are a highly secure, simple, and legitimate form of investment. Raising capital through security tokens solve decentralization and capital investment related issues.  Let’s explore the benefits STO provides to businesses -


Fully Traceable and Transparent


Security tokens are designed and offered with regulatory compliance. Registered under the SEC, STO provides investors access to company information like assets state, management structure, risk of investors, and financial results. It enables investors to conduct their own investigation and verify efficiency, professionalism, and fairness of the issuing company. Transparency enables investors to sensibly invest capital and avoid frauds and inefficiencies. It enables stakeholders to trace who and for how long they owned the tokens.


Reduce the Cost of Public Offering


Security token offerings automatically raise capital using blockchain technology to eliminate the need for a middleman. Fraudulent intermediaries maintain their own ledger of data and confuse issuer and investors by presenting ledgers that differ quite substantially.  Intermediaries charge an expensive amount which directly increases the operational cost of raising capital. STO uses smart contracts to simplify and automate the processes. It enables issuers to directly offer shares to investors, making the entire process transparent, immutable and accurate.


Intrinsic Value


Security tokens are digital certificates that provide investors access to revenue share, stocks, company’s profits, credit promises, dividend payments, and physical or virtual assets. These assets have an intrinsic value for their holders and are easily marketed without involving provider or issuer to participate in the process of generating profit. Security tokens hold a great significance in offering several benefits to investors.


STOs Always Succeed


Security token offerings are better alternatives than ICO because they are regulated and backed by real-world assets. Investors feel secure to invest with STO because they have a regulated framework and the risk of failure is almost negligible with them.


Security Tokens Increase Liquidity


Security token makes liquidity of traditionally illiquid assets possible.  Current securities require few days for settlement and can be traded only on weekdays from 9-5. Blockchain technology divides the assets into thousands or millions of digital certificates, enabling quick and easy settlement of tokens. Contrary to traditional investments, investors receive full liquidity on their assets when utility tokens are exchanged in the secondary market.



Concluding Thoughts


Raising capital through security token offering is an ideal option because they offer a high level of security to investors. These tokens are highly liquid and investors receive full liquidity on their assets when exchanged in the secondary market.


Are you planning to raise capital for your business through security tokens? Contact Oodles Technologies - we are a leading STO development company based in India. We provide highly secure fundraising through blockchain technology. We enable entrepreneurial businesses to raise capital with our secure and legally compliant STO development services. Get in touch with our blockchain team for complete details!

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