Guys, what's the difference between STO and ICO? STO - security token offering. Some say that STO has other legal consequences, in contrast to ICO. Security token becomes like a stock share, unlike a token issued on ICO. Is it right? What do you know or think about it? Personally, my opinion is that STO does not differ from the ICO.
Hi there. In essence, both STO and ICO are capital mobilization from the investors. But when it comes to "token", "ICO" is mobilizing capital through the sale of "utility token", while the STO is mobilizing capital through the sale of "security token".
The nature of 2 "token" is different:
Utility tokens can be created by anyone and are not subject to legal constraints. When the issuer of the token goes bankrupt or scam, the biggest loss is to the investor.
In contrast, the security token is bound to the publisher's assets and is governed by the law. When the issuer declares bankruptcy or commits fraud, they must liquidate all assets associated with the security token and return it to the investor as a percentage of the token they hold (like stock). At the same time, they are subject to legal action if they abuse their tokens. So investors will be protected when investing in security token.
That's all my opion.
No wonder these developers are picking ICO than STO because it's safer and there's not much obligation on their part, so do you think next itme it's much better to invest on security-based token then utility token because you are protected by the laws.