Security TokensNone of the following represents legal advice. The following is for informational purposes only. If you are planning to launch or invest in a security token please consult your attorney.
What is a security token?
Security tokens are digital, liquid contracts for fractions of any asset like real estate or corporate stock.
What is a security token offering or STO?
A security token offering is a sale of security token.
Where can security tokens be exchanged?
There are currently a variety of exchanges where Security Tokens can be purchased including TZero.
What does it cost to launch a security token?
A company looking to launch a security token must think through a multitude of steps. Polylaunch recently set up a platform for launching your own token. It's called Polymesh Studio. As of this writing, the cost to reserver a ticker symbol was roughly $50 and the Cost to lauch a security token was around $1400. Please note this doesn't include the legal costs of incorporation only the security token aspect. Our best guess is $50,000 for a full security token offering. We will get back to this aspect as there are more cases to look at.
Some of the steps of launching a security token:
- A.) What type of legal forms need to be filled out? Regulation S?
- B.) Will investors be purchasing shares in your country (probably)? Out of your country (probably)?
- C.) If in the US, has the SEC set precedent for what you are attempting to do?
- D.) How will your security token be promoted/marketed and what are the rules associated with this?
- E.) Where will your security token be traded and/or exchanged. Decentralized Excahange? Other?
- F.) What is the governance structure of your security token?
- G.) How is your token issued? Do you just start selling your tokens one at a time on the exchange or is there a better method of distribution?
- H.) How much are you looking to raise?
What are the benefits of security tokens?
Programmability - Just think what can be done with equity when it isn't solely on a piece of paper locked up in an attorney's office.
Liquidity - Why are private securities currently so combersome? They can be traded or exchanged but it requires high costs in dollars and time. I definitely say protect investors but at the same time enable liquidity.
Speed - Transactions can happen almost instantly.
More content coming soon.