Most of the World Still Doesn't Know How to Handle STOs

By Margarita Sivakova

Some investors believe that Security Token Offerings, or STOs, are the new hot trend in crypto.

Security tokens, most simply put, are blockchain tokens that confer ownership in actual securities. Much like owning a share of stock, owning a company’s security token could grant you a share of equity ownership in that company.

In theory at least, this combines the advantages of traditional stocks with the advantages of blockchain tokens, while avoiding the downsides of each. Security tokens are secure, transparent, and convenient, which isn’t always true of traditional stock trading. They also confer actual equity, whereas many traditional blockchain tokens are simply a currency and don’t represent any real-world holdings.

The complication, of course, is the regulatory environment. STO regulations vary greatly from country to country. Since they’re so new, many countries haven’t addressed them at all, meaning that they are still in legal gray area.

In the map below, we classified each country by its apparent friendliness toward STOs, categorizing each country for which we have some indication of regulatory approach as one of the following:

  • Very friendly

  • Mostly friendly

  • Moderate regulation

  • Legally challenging

These ratings take into account a variety of factors, including financial market regulation (e.g. exemptions from publishing a prospectus, investor qualification etc.), blockchain-specific laws (if applicable), procedures applicable to STO issuance, the number of STOs conducted, and the legal consequences for violating applicable legislation.

Margarita Sivakova is the CEO of Legal Nodes.



Disclaimer: the information above is provided for informational purposes only and is not legal advice, or any other type of advice. Some unofficial translations of regulatory provisions are referenced above. Legal Nodes and LongHash cannot and do not intend to guarantee that the information provided above will coincide with the position of the regulatory authorities. Information provided above may not be complete.

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