Security Token Offering (STO) is the successor of the ICO (Initial Coin Offer) block funding methodology, which increases investor security as well as being more transparent compared to standard models of investing in modern technologies. As practice shows, the introduction of STO reduces the risk of fraud and extortion, and thus increases the popularity of our project. STO allows to increase the possibilities of private investors by assigning them, among others real share rights or rights from shares of a person determined to transfer funds. The Security Token Offering can be treated as “programmable property”. STOs change the classic concept of capital and shareholding rights into technology that can use smart contracts to ensure investor safety and rights also at a distance.
The STO implementation consists in adjusting the issue of the financing model to the requirements of classical investment financial products. The task of the Security Token Offering is to ensure full compliance with statutory regulations in force in the jurisdiction where we plan to implement our investment. The level of complexity as well as the implementation costs of solutions depends on the planned project and the supported jurisdiction. It is worth remembering that the company implementing the STO is also obliged to comply with the anti-money laundering regulations and other requirements related to trading in financial instruments.
Due to numerous reports on ICO links with investors’ frauds, STO is becoming an even stronger alternative to the Initial Coin Offering, and should be of interest to anyone considering entering the blockchain market and investments related to cryptocurrencies. It is forecasted that the potential value of STO projects will exceed the popularity of ICO in the future, as well as being an alternative opportunity to invest funds in modern technologies.
It should be remembered that the STO issues are not only formal matters related to trading in financial instruments, but also tax and accounting issues. Adjustment of the profitability of the business should also consist in assessing the tax law of the jurisdiction in which we plan to put the investment, as well as the tax consequences of obtaining financing for the project. Often, double taxation treaties, dividend taxation and CFC (Controlled Foreign Corporation) matters will be fundamental to the location of STO investments.
The CGO Legal Law Firm offers preparation of full documentation and carrying out the process in the scope of Security Token Offering, in European Union countries as well as in other jurisdictions. Experienced Experts provide formal and legal services in terms of compliance with the law of the investment process as well as tax and accounting analysis undertaken to maximize the client’s financial security. We provide investment security in terms of, among others regulation of the financial market of a given jurisdiction, and recommendations of local and international tax law, focusing in particular on capital allocation issues, payment of dividends, reinvestment and correct accounting. Our experts have extensive knowledge and experience in the use of blockchain technology and cryptocurrency market around the world, helping in the implementation of procedures and recommendations for business associated with cryptocurrencies.
If you are interested in the implementation of STO or need advice on the implementation of the investment model in Security Token Offering, please contact us.