What is ICO?
ICO or the initial coin offer is a new way to raise funds, during which startups sell their tokens in exchange for popular cryptocurrencies, for example, BTC and ETH.
What are STO and DSO?
In simple terms, STO and DSO are regulated ICOs, although there is a long way to go before their full regulation. Thus, in the future something may change.
Currently, the defining aspects of STO and DSO are the fact that they are under the control of the SEC and represent a new innovative way of tokenization of traditional securities.
Advantages and disadvantages of STO and DSO
The fact that STO and DSO are regulated implies greater safety than ICO. STO and DSO are protected by SEC regulatory activities. Another advantage is that digital tokens can divide up to 18 decimal places, which makes the asset more “liquid”.
Another big advantage is the fact that STO and DSO offer greater flexibility for business owners. This should help attract more investment and lower the barriers to entry. Following a strict set of standards, rules and regulations, STO and DSO are much more transparent than many ICOs.
STO and DSO have their drawbacks, which is not surprising, because the STO and DSO market is relatively young. One of them is that DSO and STO limit investment opportunities, being available only to accredited investors.
The safety of both instruments is achieved by the fact that investors are required to undergo the KYC and AML procedures. Of course, the process becomes more complex and in this it loses the ICO, which provided any investor with the opportunity to participate, regardless of their origin, financial status or age. However, this made the ICO so risky.
Last but not least, because of their profile, STO and DSO require special platforms for sales management, which can make the process much slower and more expensive.
Can DSO and STO replace ICO?
The answer to this question is not as simple as it may seem. It is unlikely that ICO will completely disappear from the market, but STO and DSO may well be a serious competitor, since they contain solutions to many problems inherent in ICO.
So we can consider it STO's are about more likely centralized cryptocurrencies. What includes it? I mean regulation about what? Do they regulate the project itself or regulate how it works?