Introduction: STOs and NFTs
STOs stands for “security token offerings.” They involve an offering of digitalized securities such as stocks, bonds, or other token and coin projects. The difference between an IPO and an STO is that STOs are transferred and stored on blockchain technology. Both IPOs and STOs offer ownership interests and will typically also involve voting rights or the rights of the investors to receive dividends. Further, the value of the “security” will generally rise and fall based on the value of the issuer.
The difference between an ICO and an STO is that an STO is registered or exempted with the Securities Exchange Commission (SEC) and is compliant with federal securities laws. ICOs are generally not registered with the SEC and have gathered somewhat of a negative connotation with the SEC. For instance, the ICO boom from 2017-2018 led to significant monetary losses and instances of fraud—circumstances that could have been largely avoided if the issuers had been forced to operate under the jurisdictional and regulatory authority of the SEC. As a result, STOs were developed to accomplish the same purpose of ICOs—issuance of tokens or coins on blockchain technology—but in a way that is compliant with the federal securities laws.
Non-fungible tokens (“NFTs”) are pieces of a digital asset that are stored on the blockchain. NFTs are unique and non-fungible—meaning they cannot be exchanged for one another. Each NFT is one-of-a-kind. This scarcity creates value. The ownership of each piece is located on the blockchain, which represents a permanent and genuine record of ownership. No one can forget the NFT collage called “Everydays: The First 5000 Days,” which was created by digital artist Beeple and ultimately sold for $69 million. This article, drafted by the STO Attorneys at Oberheiden, P.C., provides key tips and explanations you should consider before launching an STO for your NFT project.
Thinking About an STO for Your…
