STO vs IPO

Demarcation white paper

One decisive element in determining the applicable requirements is the difference between IPO and STO.

• In the case of an IPO, securities (shares, bonds) are publicly offered and/or traded on a regulated market. Also, the Authority for the Financial Markets (AFM) requires companies to draw up a prospectus containing detailed information about the company and the financial instrument. This prospectus must be approved by the AFM and subsequently publicly presented for the IPO. 
• When issuing electronic shares/tokens/coins (STO), the obligation to have an approved prospectus available only applies if the total value of the offer exceeds EUR 5 million (as of 1 October 2017). For an STO with a total value of less than EUR 5 million, the prospectus requirement is replaced by the exemption statement.

Faster and cheaper share transactions

With a Security Token Offering (STO), trading company shares will be so much easier and cheaper as compared to a traditional IPO.

• Lead times for a share transaction will be reduced from 35 days to 3 minutes.
• The cost per such transaction will be reduced from 1500 euro to 15 euro cents.

An STO benefits both your company and investors

For companies, it’s a significant cost saving compared to lending, it avoids the risk of long lead-times to find venture capital and eliminates the risk of one intrusive venture capitalist that takes too much control and eliminates the entrepreneurial strength.

For investors, this is a solid and secure investment in crypto, because they actually receive the right to shares in a company. Identical to investing in the stock market and very different from investing in a cryptocurrency or ICO.

• When consumers invest in Security Tokens, they are actually buying real shares in companies, to which they would never have had access otherwise.
• They can invest small amounts and get voting rights and dividend rights if they desire to have this. This way they become part owners of the asset.
• When investing in an ICO or participating in crowdfunding, the investors never become owners as they merely are money donors without actual rights.