Security Token Offering (STO) Structuring

Structuring
Security Token Offering (STO)

When we talk about Security Token Offering (STO), we refer to two processes: Tokenization, the process of digitalization of financial assets and securities, and Security Token Offering, their subsequent sale to raise capital.

The steps to launch an STO are:

When we talk about Security Token Offering (STO), we refer to two processes: 

  • Tokenization, the process of digitalization of financial assets and securities.
  • Security Token Offering, their subsequent sale to raise capital.

Step 1: Legal Preparation 

In order to issue an STO it is strictly necessary to comply with all financial regulations and specific requirements. The first thing to define is the tradable value to be digitalize and the rights to be given to the investor. Once this first point is defined, an investment memorandum is prepared which has to be validated by an investment services company. 

In this step, processes are completed such as: 

  • KYC, Know Your Client, where the suitability of the investors is studied.
  • Supervision and validation of the investment memorandum. Since most STOs are qualified as Private Placements, it is necessary that there is an investment services company involved in the supervision of the initial sale of tokens. This firm must validate the investment memorandum and ensure that all information is clear, objective and sufficient.

Step 2: Security Token Technology Development

The technological development of the security token consists of structuring the Smart Contract. In this contract all the information that was defined in step 1 will be placed, and the clauses will be automatically executed once the contract is activated.

Step 3: Selling the Tokens

Once the legal structuring process is completed and the token has been developed, the STO can be launched and the capital raising process begins. It is important that the investors to be involved have completed the KYC process, as this is a legal requirement. 

Time is an important factor to consider. It usually takes between 6 and 8 weeks to complete steps 1 and 2, and the sale of the tokens can take a minimum of 6 weeks and a maximum of 1 year.

Articles

Security Token Offering (STO) Structuring

When we talk about Security Token Offering (STO), we refer to two processes: Tokenization, the process of digitalization of financial assets and securities, and Security Token Offering, their subsequent sale to raise capital.

The steps to launch an STO are:

When we talk about Security Token Offering (STO), we refer to two processes: 

  • Tokenization, the process of digitalization of financial assets and securities.
  • Security Token Offering, their subsequent sale to raise capital.

Step 1: Legal Preparation 

In order to issue an STO it is strictly necessary to comply with all financial regulations and specific requirements. The first thing to define is the tradable value to be digitalize and the rights to be given to the investor. Once this first point is defined, an investment memorandum is prepared which has to be validated by an investment services company. 

In this step, processes are completed such as: 

  • KYC, Know Your Client, where the suitability of the investors is studied.
  • Supervision and validation of the investment memorandum. Since most STOs are qualified as Private Placements, it is necessary that there is an investment services company involved in the supervision of the initial sale of tokens. This firm must validate the investment memorandum and ensure that all information is clear, objective and sufficient.

Step 2: Security Token Technology Development

The technological development of the security token consists of structuring the Smart Contract. In this contract all the information that was defined in step 1 will be placed, and the clauses will be automatically executed once the contract is activated.

Step 3: Selling the Tokens

Once the legal structuring process is completed and the token has been developed, the STO can be launched and the capital raising process begins. It is important that the investors to be involved have completed the KYC process, as this is a legal requirement. 

Time is an important factor to consider. It usually takes between 6 and 8 weeks to complete steps 1 and 2, and the sale of the tokens can take a minimum of 6 weeks and a maximum of 1 year.

Articles
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