STO vs IPOWhy choose an Security Token Offering over an Initial Public Offering?
STO to IPO comparison
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.
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